Commonwealth Bank of Australia Reports Stronger First Quarter Profit – Update

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   By Alice Uribe 
 

SYDNEY – The Commonwealth Bank of Australia said its first quarter profit was higher, with the lender reporting above-system volume growth in major markets and a strong balance sheet.

The bank, Australia’s largest by market value, reported unaudited net profit of about A $ 2.3 billion ($ 1.68 billion) for the three months through September.

No comparable figure has been disclosed. This is an increase of around 22% from the A $ 1.90 billion profit reported by ABC a year earlier.

First-quarter cash profits, a metric tracked by analysts that exclude items such as currency hedging volatility and losses or gains on asset sales, was around $ 2.2 billion. Australian.

The bank said cash profits were down 9% from the quarterly average of the previous six months, which benefited from the release of quarterly provisions, but up 20% from the first quarter of the year. fiscal year 2021.

“In the first quarter of fiscal 2022, our focus remained to support our employees, customers and communities as the economy recovers from the impact of Covid-19,” said Chief Executive Officer Matt Comyn .

“Our focus on operational execution ensures that we are well positioned to provide this support as business restrictions continue to ease,” he added. “This has translated into strong above-system volume growth in core markets in the first quarter of fiscal 2022, continued strong portfolio credit quality and strong balance sheet. ”

The big Australian banks appear to have ignored the long lockdowns linked to the pandemic to achieve better results for the entire year. According to EY’s analysis, aggregate profits for Australia’s major banks rose 55% to A $ 26.8 billion.

“The result was supported by strong housing market activity, better-than-expected depreciation results which allowed the release of pandemic-related provisions and less notable spending,” EY said.

Nonetheless, the CBA said its net interest margin was “considerably lower”, in part due to price competition for home loans and the shift from customers to low-margin fixed-rate loans, and in part. partly due to the continued impact of a low interest rate environment.

The lender’s operating profit was down 1% from the quarterly average for the second half of fiscal 2021. It was stable excluding the sale of Australian home loans, the volume growth outstripping the system. helping to offset persistent pressures on margins and declining non-interest income.

ABC spending was also down 1% from the quarterly average for the second half of fiscal 2021, with the lender citing lower remediation costs that offset higher staff costs. The bank reported A $ 103 million loan impairment charge in the quarter, which equates to 5 basis points of average gross loans and acceptances.

CBA’s Tier 1 capital ratio was 12.5% ​​at the end of September, up 19 basis points in the quarter.

Following provision reversals in the second half of fiscal 2021, the CBA said credit provisions were broadly unchanged at A $ 6.2 billion. The lender said it continues to reflect sound portfolio credit quality and a cautious approach to provisioning as Australia’s economy recovers from the impact of the pandemic restrictions.

 

Write to Alice Uribe at [email protected]

 

(END) Dow Jones Newswires

November 16, 2021 17:02 ET (22:02 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.


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