Commonwealth Bank Record Profit

Submitted by Share Trading on 12 August, 2010 - 10:49

Australian banking company, Commonwealth Bank (ASX:CBA) announced a record $6.1 billion net profit after tax, up 42 percent on the previous year. However the bank's shares dropped 3 percent or$1.56, to $51.19 (almost $9 below the stock's peak this year). The market jitters was caused by weaker second half performance.

  • Cash NPAT of $6,101 million - up 42 percent on prior year;
  • Banking businesses performed well on the back of solid volume growth;
  • Disciplined and consistent execution of key strategic priorities delivers for customers and shareholders;
  • Commonwealth Bank fully franked final dividend of $1.70 - up 48 percent on prior year;
  • Return on Equity rebounds sharply to 18.7 percent;
  • Capital (Tier 1 of 9.15 percent), funding and provisioning all remain strong; and
  • Group ideally positioned to continue to outperform with a well managed, diversified business portfolio and strong stable financial platform.

Commonwealth Bank Dividend

The final dividend declared was $1.70 per share, an increase of 48 percent on the prior year. The total dividend for the year to 30 June 2010 was $2.90, taking the cash dividend payout ratio to 74 percent. The final dividend payment will be fully franked and will be paid on 1 October 2010. Given the Group's high level of Tier 1 capital, the Directors have decided to remove the previous Dividend Reinvestment Plan discount of 1.5 percent and neutralise or minimise the dilutive effect of the Dividend Reinvestment Plan through an on-market share purchase and transfer to participants.

CommBank Outlook

Commenting on the outlook for the 2011 financial year Ralph Norris said: "Despite some improvement, the global recovery remains uneven with the concerns about the advanced economies balanced out by some strength in the emerging economies."

"The Australian economy remains well placed relative to most other developed countries and I am optimistic about the medium-term outlook for Australia and for the Group’s ability to deliver superior returns for our shareholders."

"However, recent uncertainty over the pace of recovery in the United States and Europe highlight the downside risks still in play. These risks have not helped domestic business and consumer confidence, both of which remain fragile. This fragility manifested itself in a slowing in the underlying momentum in our business at the end of the 2010 financial year."

"As a result it is appropriate to maintain a degree of caution about the prospects for our business for the coming year. We intend to retain conservative capital and liquidity settings for the foreseeable future so that we are able to provide support to our customers in these uncertain times".