The Commonwealth Bank (CBA) will pay an unchanged interim dividend of $1.98 a share for the December half year after reporting a modest 4% rise in cash earnings to $4.8 billion.
The country’s biggest bank revealed this morning that the rise in cash earnings came after a stronger rise in operating profit – up 6% to $12.6 billion for the December six months.
While the dividend hasn’t been increased (not too many analysts were expecting that) it wasn’t cut, as some silly analysts and fund managers were starting to speculate in recent days (for cheap headlines).
Significantly, the bank reported a very solid return on equity for the half year of 17.2%, which is considerably more than the 2% cash rate and the 2.40% 10-year bond rate. While that was down 1.40 percentage points from a year ago, the bank points out its capital base was expanded by $5.1 billon in new capital in that time.
CBA 1Y – CBA steadies the ship
The bank said net interest income had risen 6% in the six months ended December 31, while its ratio of impaired assets was stable at 0.17% of loans.
CBA shares closed down 4.6% yesterday at $72.87 and have lost nearly 23% in the past year and more than 13% so far in 2016, as investors have fretted about the stability of the sector worldwide and any spillover effects into the local market.
Certainly the slowing housing boom and rising funding costs because of the rise in offshore volatility have hurt investor views about the banks and the CBA – being the sector leader. That helps explain the big falls in the bank sector in the past year.
