The Commonwealth Bank (ASX:CBA) has edged up its final dividend for the 2023-24 financial year, despite a dip in revenue and earnings.
While the result is solid, it doesn’t appear to justify the 11% surge in the bank’s value over the past three months, propelling it to the title of the country’s most valuable company.
CBA shares climbed 1.5% on Tuesday alone, surpassing $132 ahead of the result, which revealed a surprising fall in loan loss provisions for the year.
However, investors seem to be overlooking the slightly weaker result — earnings down 3% and revenue off 2% — focusing instead on a 10-cent-per-share lift to the full-year payout of $4.60 per share.
The final dividend was boosted to $2.50 per share from $2.40, following an interim payment of $2.15 earlier in the year, which was only up 5 cents per share.
The CBA reported revenue of $US26.921 billion, with cash earnings down 2% to $9.836 billion and statutory profits down 6% to $9.394 billion.
Net interest margin slipped 8 basis points to $1.99 for 2023-24 but improved one point from the December half-year.
Loan impairment expenses dropped sharply to $802 million, despite higher mortgage rates and growing customer pressures. The CBA attributed this to a 28% decline from 2022-23 and a 7% decrease from the first half of the June year, indicating slightly improved credit quality in the second half.
CEO Matt Comyn offered general comments in the earnings release.
“We have maintained strong loan loss provision coverage, with surplus capital and conservative funding metrics. Our disciplined approach to managing our balance sheet positions us with flexibility and capacity to navigate various economic scenarios while continuing to deliver sustainable returns.
We have declared a final dividend of $2.50 per share, fully franked, resulting in a full-year dividend of $4.65.”
He described the Australian economy as resilient, supported by low unemployment, ongoing private and public investment, and exports.
“Higher interest rates are slowing the economy and gradually moderating inflation,” Comyn said. “Australia remains well positioned, but downside risks persist in areas such as productivity, housing affordability, and global uncertainty.”
