CBA reported statutory net profit after tax of A$9.48 billion for the year to 30 June 2024. This was down 6 per cent on the previous year's result, and 4 per cent below the first half of FY24.
Despite volume growth in CBA's core businesses, NPAT was offset by lower lending and deposit margins, along with inflationary increases in operating expenses. These downward pressures on profits were partly offset by a lower loan impairment expense.
Cash NPAT from continuing operations was down 2 per cent, year-on-year to $9.84 billion, and down by 4 per cent on 1H24.
The difference between the two measures of NPAT was largely due to gains and losses, net of transaction costs, associated with previously announced business divestments and closures: eg, PT Bank Commonwealth, CommInsure General Insurance and Count Financial.
CBA's pre-provision profit of $14.96 billion for FY24 was down 2 per cent on FY23, and down by 4 per cent on the first half of FY24. This was due to "continued competitive pressure on margins and inflationary cost increases," according to CBA.
Income: Net interest income decreased 1 per cent, compared FY23, to $22.82 billion, driven by a lower net interest margin, and partly offset by volume growth in home and business lending. Other operating income was $4.35 billion, an increase of 7 per cent over FY23. Overall, operating income remained flat (up by 0.1 per cent year-on-year) at $27.17 billion for FY24, after falling by 0.9 per cent half-on-half.
Expenses and cost to income: Operating expenses rose 4.1 per cent year-on-year to $12.13 billion, outpacing flat revenue growth, led by wages growth that included higher super guarantee payment and higher occupancy costs (ie, increased office attendance); also higher technology costs – eg, increased capitalised software amortisation and higher software licence and cloud computing volumes. The group's overall cost-to-income ratio rose 370 basis points from 42.9 per cent in FY23 to 44.6 per cent in FY24.
Impairment expense: The group's loan impairment expense was reported as $802 million, reflecting a loan loss rate of 9 basis points. This was 28 per cent down on FY23,
Loan impairment expenses decreased due to rising house prices, and lower expected losses within CBA's consumer finance businesses. Consumer arrears increased by reflecting the impact of higher interest rates and cost of living pressures on some borrowers. Provision coverage remains strong at 1.66 per cent of credit risk weighted assets and we maintain a $2 billion buffer relative to the losses expected under our central economic scenario
Margin: Group net interest margin fell 8 bps year-on-year to 1.99 per cent. The bank stated this decline was "largely due to the impact of competition and deposit switching, partly offset by higher earnings on replicating portfolio and equity hedges." NIM stabilised during the second half of the year, showing a 1 point increase over the first half of FY24.
Return on equity: ROE on a cash basis fell year-on-year from 13.9 per cent in FY23 to 13.6 per cent in FY24, due to lower profits.
Earnings per share: Earnings per share (on a cash basis) have fallen by 8 cents per share to $5.88 a share in FY24.
Dividend: The bank's final dividend of $2.50 per share gave shareholders a total FY24 dividend per share of $4.65, fully franked, and an increase of 3 per cent over FY23. This was a payout ratio of 79 per cent of cash NPAT, at the upper end of CBA's target payout range. The lower share count resulting from almost $9.3 billion in buy-backs completed since FY22 contributed an additional 26 cents to CBA's FY24 dividend per share (at current payout ratio).
The divisions: CBA’s biggest divisions, retail banking and business banking, contributed $5.36 billion (54 per cent) and $3.77 billion (38 per cent) to group NPAT, respectively. These results were down 4 per cent, and up by 4 per cent, respectively, on the group's FY23 results. In New Zealand, ASB's operations accounted for 13 per cent of the group's NPAT – 10 per cent down on FY23.
Market share: The bank’s share of the Australian and NZ markets slipped slightly year-on-year or remained steady across most business lines. According to APRA's data, CBA's share of the home loan market was 25.2 per cent in FY24 (25.8 per cent in FY23); credit cards, 27.4 per cent (28.9 per cent); household deposits, 26.5 per cent (26.9 per cent). The exception was for business lending, where CBA increased its market share to 18.4 per cent, up from 18.0 per cent. In New Zealand, RBNZ data show CBA's mortgage market share was 20.9 per cent (21.5 per cent in FY23); NZ business and rural lending, 17.1 per cent (17.2 per cent) and NZ customer deposits 18.7 per cent (18.5 per cent).
Capital: The bank’s common equity tier 1 capital ratio rose 10 bps year-on-year to 12.3 per cent. As at 30 June 2024, the Bank has completed $282 million of the announced $1 billion on-market share buy-back. The buy-back period has been extended by an additional 12 months "to allow for flexibility in execution", with completion expected to reduce the Bank’s CET1 capital ratio by around 15 bpts, the bank said. Assuming the buyback is completed as announced, the group's post-dividend CET1 capital ratio is expected to remain above 11.0 per cent.
Funding and liquidity: CBA's deposit funding strengthened to 77 per cent of total funding, or $834 billion. Long-term wholesale funding accounted for 61 per cent of total wholesale funding. The liquidity coverage ratio and net stable funding ratio are well above minimum regulatory requirements, sitting at, respectively, 136 per cent (vs 131 per cent LCR in FY23) and 116 per cent (down from a NSFR of 124 per cent in FY23).