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Commonwealth Bank (CBA) $104.85

CBA +2.58%: Australia’s 2nd largest company (behind BHP) released FY23 results this morning that were a modest beat to expectations as margins improved 17bps to 2.07%, ahead of the 2.05% consensus expectations.  Operating income of $27.24bn was up 13% while cash earnings of $10.164bn increased 6% and were in line with $10.17bn forecast. Margins were a focus leading into today’s result and they’ve done well here despite the competition, although we did think the competitive backdrop in mortgages and more importantly retail deposits have become more rational over recent months.

Earnings per share (EPS) of $6.015 was pleasing and a slight beat while the FY dividend of $4.50 was ahead of the $4.33 consensus (2H dividend of $2.40), and is based on a 74% payout ratio. Capital levels are strong and above expectations while they did experience a reasonable uplift in provisioning for bad loans. We were not expecting any new buy-backs, however, they did announce an additional $1bn on-market program which reflects their strong capital position.

The commentary was cautious, with CEO Matt Comyn saying….We are seeing consumer demand moderate and economic growth slow and we are closely monitoring the impact of reduced discretionary spending, particularly on our small and medium-sized business customers.

  • A very good result from CBA.
MM remains long CBA in the Income Portfolio
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Commonwealth Bank (CBA)
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