CBA profit plunges by 11.3 per cent amid Covid-19
The Commonwealth Bank of Australia has recorded $7.3 billion in net profit after tax, a fall of 11.3 per cent on the previous financial year as the bank dials up its estimation of loans that won’t ever be repaid.
The bank released its 2020 financial results on Wednesday, revealing it has now set aside a total of $2.52 billion for loan impairment expenses, nearly double the amount it set aside last year.
“During the financial year, we took an additional credit provision of $1.5 billion for the potential impacts of Covid-19 on our lending portfolios,” a CBA statement said.
“This took into account the stress to the economy introduced by Covid-19 and the mitigating impacts of government and industry assistance packages and support, such as loan repayment deferral arrangements.”
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Full year dividends fell by nearly a third (31 per cent) from FY2019 to $2.98 per share, fully franked.
CBA recorded $9.63 billion in statutory net profit after tax, up 12.4 per cent from the previous financial year, supported by the sale of some of its businesses.
Operating income rose by 0.8 per cent to $23.76 billion, while operating expenses also rose by 0.7 per cent to $10.9 billion due to higher staff and IT costs.
Net interest margin fell by 2 basis points to 2.07 per cent due to the record-low interest rates.
CBA chief Matt Comyn said the bank was “prepared for a range of economic scenarios”.
“We anticipate that lower credit growth and low interest rates will continue to put pressure on our revenue, requiring a focus on performance, efficiency and capital allocation,” he said.
“Despite the challenging environment, operational performance in the business remains strong.
“Combined with our strong balance sheet and capital position, this enables us to continue supporting customers and the economy.”
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