CBA com­mits to sus­tain div­i­dend

Mercury (Hobart) - - BUSINESS - STU­ART CONDIE

COM­MON­WEALTH Bank chief ex­ec­u­tive Matt Comyn has sig­nalled his de­ter­mi­na­tion that the na­tion’s big­gest bank will not fol­low its ri­vals in cut­ting its div­i­dend.

An­nounc­ing a near 10 per cent fall in first-quar­ter profit, Mr Comyn said he was mind­ful that many peo­ple re­lied on CBA dividends for their in­come.

The boss of the lend­ing giant also said he would not pri­ori­tise one group of stake­hold­ers over another.

The com­ments fol­low the ma­jor banks com­ing un­der fire for not pass­ing on all of the RBA’s re­cent in­ter­est rate cuts.

“In a low in­ter­est rate en­vi­ron­ment we will con­tinue to main­tain a dis­ci­plined ap­proach that de­liv­ers bal­anced out­comes for all our stake­hold­ers, in­clud­ing over six mil­lion sav­ings cus­tomers, 1.6 mil­lion home loan cus­tomers and 800,000 re­tail share­hold­ers, in­clud­ing many re­tirees, who rely on our div­i­dend,” Mr Comyn said.

Ri­vals West­pac and Na­tional Aus­tralia Bank cut their dividends last week, as their prof­its were dragged down by the huge cost of re­me­di­at­ing cus­tomers for poor be­hav­iour and low in­ter­est rates.

ANZ cut the level of frank­ing at­tached to its div­i­dend for the first time in 20 years when it re­leased its full-year re­sults at the end of last month.

CBA yes­ter­day de­clared an un­der­ly­ing cash profit of $2.3 bil­lion for the three months to Septem­ber 30.

That was 9.6 per cent lower than the same pe­riod a year ear­lier but 5 per cent higher than the av­er­age of the pre­ced­ing two quar­ters, the bank said.

The cash profit mea­sure ex­cludes volatil­ity from items in­clud­ing hedg­ing and losses or gains on ac­qui­si­tions or di­vest­ments.

Mort­gage lend­ing rose 3.5 per cent over the quar­ter, while house­hold de­posits grew a healthy 10.4 per cent.

Net profit surged 55 per cent to $3.8 bil­lion as the CBA col­lected $1.5 bil­lion from the sale of Colo­nial First State Global As­set Man­age­ment to Mit­subishi in Au­gust.

In­vestors were gen­er­ally buoyed by the re­sult, but Mr Comyn warned of chal­lenges.

“The bank re­mains well placed in a chal­leng­ing op­er­at­ing en­vi­ron­ment, char­ac­terised by global macroe­co­nomic un­cer­tainty and his­tor­i­cally low in­ter­est rates,” he said.

Trou­ble­some and im­paired as­sets edged slightly higher, with pock­ets of stress “sim­i­lar” to those noted at its full-year re­sults in Au­gust when the bank called out weak­ness in sec­tors linked to con­sumer spend­ing, agri­cul­ture and con­struc­tion, plus home loan im­pair­ments in WA and Queens­land.

Com­mon­wealth Bank has set aside $2.2 bil­lion for re­me­di­a­tion and re­lated work, $1.2 bil­lion of which is for cus­tomer re­funds.

CBA shares rose 1 per cent yes­ter­day to close at $80.83.

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