As expected the Commonwealth Bank (CBA) plans to ask shareholders for around $5 billion in a generous discounted pro rata capital issue after revealing a 5% rise in cash profit for the year to June and a small dividend boost.
The bank, the country’s largest, said in a statement issued before trading this morning that group’s after tax cash profit rose 5% to a record $9.137 billion. The statutory after tax profit was also up 5% at $9.063 million.
That will be smaller than the $5.3 billion issue announced by the National earlier in the year, and far more generous than last Friday’s $3 billion rushed raising by the ANZ which has stiffed small shareholders.
The CBA said the Board had declared a final dividend of $2.22 per share – up 2% on the 2014 final dividend. That makes a total dividend for 2014-15 of a massive $4.20 a share, up 5%.
The cash dividend payout ratio for full year was 75.1 per cent of cash NPAT, which was in line with the prior year and within the Board’s target range of 70 to 80 per cent. The final dividend will be fully franked and will be paid on 1 October 2015. The ex-dividend date is 18 August 2015.
CBA shares are in a trading halt ahead of the deal.
CBA 1Y – Comm Bank posts record $9.14bn profit
The bank said there was a small improvement in the Group cost to income ratio of 10 basis points to 42.8%, thanks to the bank’s heavy spending on technology to improve productivity ($1.2 billion in the year).
Falling interest rates again pressured the bank’s net interest margin lower.
"Net interest margin (NIM) decreased by 5 basis points to 2.09 per cent year on year driven by the negative impacts of the falling cash rate environment and an increase in liquid assets. Excluding treasury and markets, Group NIM was down 1 basis point over the year,” directors said in this morning’s statement.
The cash issue will be generous – at a 10% discount to Monday’s closing price of $82.12.
The bank said the issue terms will be one new share for every 23 held, at a price of $71.50. (meaning around 71 million new shares will be issued).
The new shares will not qualify for the final dividend announced today, but will rank equally with existing shares in all other respects.
