Australian Investment Blog
ASX:CBA 08/08/2018
Comyn gets the nod for his first result in charge of CBA
Stock
Commonwealth Bank (CBA) $74.54 as at 8/08/2018
Event
The CBA result was out this morning and it was messy however that was to be expected amid charges from the money-laundering settlement, margin pressure from short-term funding costs (CBA have not repriced loans higher) and the overall financial cost of ongoing regulatory issues.
Actuals v expectations – about inline
Underlying trends
Loan growth: running at 2% for the FY18 financial year for the bank and its Australian business
Margins; the Australian loan to deposit spread fell by 2 bps from 1H18 to 2H18 and so did the net interest margin, expect some re-pricing up of CBA mortgage rates
Credit Quality; this was better with new and increased impaired assets falling from $1.25B in 1H18 to $882M in 2H18 plus we saw past due loans remain stable
Trading Income; this was weak however that was well flagged
Costs; overall costs were higher thanks to one offs however costs in the underlying business are being well managed (ex
Capital; Tier 1 capital remained flat at 10.1%
Commonwealth Bank (CBA) Chart
Market Matters Take/Outlook
There was always going to be very little incentive for CBA to deliver a strong result today, however the result announced this morning is a reasonable one on an underlying basis and importantly, better than the market may have feared. The headlines will highlight that CBA have booked the first drop in profit since 2009 thanks to weak revenue growth and higher costs however assuming conditions remain as they are, that trend should flip back at the next set of results.
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