The pain in CBA

Ian Rogers

CBA's CFO (L) and CEO

As the bank treads water rather than growing fast, you have to wonder what the Commonwealth Bank result for the June 2023 full year tells you about coordination in Australian banking. 
 
The last 18 months have been a brilliant time to be growing fast, if that’s what you wanted to do. 
 
CBA could have been growing fast very easily if it cared to, and growing fast is what it needed to be doing.
 
Instead, CBA has held its market share steady, in line with undertakings made at some coordination meeting. Or signalled or intuited somehow else, we’re not sure.
 
What is sure is that CBA is showing plenty of discipline on the oligopoly coordination side, but nowhere near enough discipline on the margin side. 
 
Given the recent history the bank could reasonably be expected to have delivered on the margin side and showcased a bit of method to the sector.
 
Australian bank profits are falling: this was CBA CEO Matt Comyn’s key point in his presentation yesterday. 
 
Comyn lashed higher liquidity holdings as primarily responsible for eviscerating industry profits to the tune of A$7 billion to $11 billion, or broadly equal to his own annual profit.
 
CBA’s net profit from continuing operations was $10.2 billion in 2023, up from $9.7 billion in 2022.
 
Pre-provision profit was $15.6 billion, up 19 per cent. Cash NPAT advanced only six per cent.
 
Expenses increased four per cent to $11.9 billion. CBA may be Australia’s most efficient bank, but it is by no means efficient.
 
On the other hand, its cost to income ratio fell materially to 42.8 per cent.