CBA commits to sustain dividend
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.