Commonwealth Bank of Australia releases 1H 2017 report.

February 15, 2017
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Commonwealth Bank of Australia releases 1H 2017 report.

Statutory net profit after tax (NPAT) of $4,895 million, up 6%.2
Cash NPAT of $4,907 million, up 2%.
Operating income of $13,126 million, up 6%.
Interim dividend of $1.99 per share, up 1 cent.
Earnings per share (cash) of $2.86, flat.
Return on equity (cash) of 16.0%.
Common Equity Tier 1 capital ratio of 9.9% on an APRA basis, 15.4% on an internationally comparable basis.

CEO Ian Narev said:

“We have maintained our commitment to our long term strategy. We have invested carefully but consistently over many years, leading to ongoing revenue and balance sheet growth, and continuous innovation for our customers. At the same time, our emphasis on productivity has ensured that expense growth is fit for the times.”

Financial Performance

The Group’s net profit after tax (“statutory basis”) for the half year ended 31 December 2016 increased 6% on the prior comparative period to $4,895 million. Return on equity (“statutory basis”) was 16.0% and Earnings per share (“statutory basis”) was 285.3 cents, an increase of 4% on the prior comparative period. The Management Discussion and Analysis discloses the net profit after tax on both a statutory and cash basis. The statutory basis is prepared and reviewed in accordance with the Corporations Act 2001 and the Australian Accounting Standards, which comply with International Financial Reporting Standards (IFRS).

The cash basis is used by management to present a clear view of the Group’s underlying operating results, excluding certain items that introduce volatility and/or one-off distortions of the Group’s current period performance. These items, such as hedging and IFRS volatility, are calculated consistently with the prior comparative period and prior half disclosures and do not discriminate between positive and negative adjustments.

A list of items excluded from statutory profit is provided in the reconciliation of the Net profit after tax (“cash basis”) on page 3 and described in greater detail on page 15. The Group’s vision is to excel at securing and enhancing the financial wellbeing of people, businesses and communities. The long-term strategies that the Group has pursued to achieve this vision have continued to deliver high levels of
customer satisfaction across all businesses and another solid financial result. Operating income increased, relative to both the prior comparative period and prior half, including a $397 million gain on sale of the Group’s remaining investment in Visa Inc.

Operating expenses increased, including a $393 million one-off expense for acceleration of amortisation on certain software assets. Underlying expenses increased due to higher staff costs, partly offset by the incremental benefit generated from productivity initiatives. Loan impairment expense increased, primarily due to higher provisioning levels in Bankwest and Retail Banking Services. Provisioning levels remain prudent and there has been no change to the economic overlay.

Net profit after tax (“cash basis”) for the half year ended 31 December 2016 increased 2% on the prior comparative period to $4,907 million. Cash earnings per share was 285.8 cents per share, flat on the prior comparative period. Return on equity (“cash basis”) for the half year ended 31 December 2016 was 16.0%, a decrease of 130 basis points on the prior comparative period.

Capital

After allowing for the implementation of the APRA requirement to hold additional capital with respect to Australian residential mortgages, effective from 1 July 2016, the Group continued to strengthen its capital position during the half year. As at 31 December 2016, the Basel III Common Equity Tier 1 (CET1) ratio was 15.4% on an internationally comparable basis and 9.9% on an APRA basis.

Funding

The Group continued to maintain conservative Balance Sheet settings, with a considerable portion of the Group’s lending growth funded by strong growth in customer deposits, which increased to $541 billion, up $41 billion on the prior comparative period.

Dividends

The interim dividend declared was $1.99 per share, an increase of 1 cent on the prior comparative period. This represents a dividend payout ratio (“cash basis”) of 69.9%. The interim dividend payment will be fully franked and paid on 4 April 2017 to owners of ordinary shares at the close of business on 23 February 2017 (record date). Shares will be quoted ex-dividend on 22 February 2017.

Re-disseminated by The Asian Banker