Troubled bank posts huge profit

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The Commonwealth Bank has reported its eighth record profit in a row. Picture: AFP

COMMONWEALTH Bank has posted its eighth record annual cash profit — of $9.9 billion.

The bank this morning said cash net profit had risen 4.6 per cent to $9.881 billion in 2016/17, while its statutory result was up 7.6 per cent to $9.928 billion.

It declared a dividend of $4.29 for the year, up from $4.20 per share.

The result is higher than expectations, and the dividend almost double the anticipated figure. But any celebrations are likely to be muted amid allegations of anti-money laundering law breaches and concerns about the future of the east coast housing market.

Analysts had expected Australia’s largest bank to lift cash profit about 3.7 per cent to $9.8 billion. However, all eyes will be watching closely for commentary on the effects of recent regulatory intervention to address record household debt and the impact on margins.

Commonwealth Bank CEO Ian Narev in a briefing in Sydney on Sunday. Picture: Hollie Adams

Commonwealth Bank CEO Ian Narev in a briefing in Sydney on Sunday. Picture: Hollie AdamsSource:News Corp Australia

“The outlook for net interest margin will be a key focus, with the recent mortgage repricing and this year’s trends in wholesale and deposit funding spreads suggesting tailwinds in the short term,” Deutsche analyst Anthony Hoo wrote in a note.

CBA is the only major lender to announce full-year results in August, and lending margins could benefit from increased interest rates for investor and interest-only mortgages following March’s sector-wide intervention by the Australian Prudential Regulatory Authority.

CBA shares closed down 1.1 per cent yesterday at $80.65, wiping out the previous day’s partial recovery from a four per cent plunge on Friday.

That came amid allegations by the Australian Transaction Reports and Analysis Centre (AUSTRAC) of more than 53,000 alleged breaches of anti-money laundering and counter-terrorism financing laws.

CBA has stripped chief executive Ian Narev and other executives of short-term bonuses in an act of contrition for what it has said was a result of an IT problem.



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