CBA Posts $9.9b Profit
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The Commonwealth Bank has given dividends a boost to keep shareholders happy amid the concerns of the money laundering scandal. At the same time the bank has revealed it is looking at selling its troublesome insurance arm, while it is going to buy the remaining 20% of Aussie home Loans that it doesn’t already own.
The bank revealed this morning that it will pay a final of $2.30 a share, up from $2.20 a share a year ago.
Coupled with the higher interim of $1.99 a share ($1.98 a share), the CBA’s total payout for the year will be a record $4.29 a share or 75% of net profit after tax.
It is the one way the bank has of meeting concerns from its 800,000 shareholders within Australia that the scandal is going to cost them income when a fine is eventually levied by regulators after the looming Federal Court hearing of the action brought by the cash monitoring agency, Austrac.
The bank reported a record net profit of $9.928 billion for the year to June, about what the market had been expecting and up 8%.
That was struck on a 1% rise in revenue to $44.9 billion for the year, indicating that the bank managed to fatten profit margins in a year when many analysts had thought that would not happen. That improvement in margins came despite a 3 cents fall in the bank’s net interest margin to 2.11% (or 2.11 cents in the dollar).
In a comment with the statement, embattled CEO, Ian Narev said “Commonwealth Bank’s performance this year has again contributed to the financial wellbeing of our customers, shareholders, our people and the Australian economy. This is the result of our consistent focus on customer satisfaction, innovation and financial strength.”
And the bank also revealed a shake up in its structure;
"We are in discussions with third parties in relation to their potential interest in our life insurance businesses in Australia and New Zealand. The outcome of those discussions is uncertain. While the discussions may lead to the divestment of those businesses, we will also consider a full range of alternatives, including retaining the businesses, reinsurance arrangements or other strategic options,” directors said this morning.
And John Symond is to end his long associated with the CBA and his Aussie Home Loans company.
"On 4 August 2017, John Symond exercised his put option which will require us to acquire the remaining 20% interest in Aussie Home Loans (AHL). The purchase price will be determined in accordance with the terms agreed in 2012 and the purchase consideration will be paid in the issue of CBA shares. We will consolidate AHL from completion of the acquisition which is currently expected to be in late August 2017. "
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.