CBA profits up 23 per cent to $4.7b, lifts share buyback

The Commonwealth Bank first-half cash profits swelled by almost a quarter to $4.7 billion and it will return a further $2 billion to investors through a share buyback, as the banking giant’s bottom line benefited from market share gains and lower provisions for bad debts.

CBA on Wednesday reported it had grown faster than the market in mortgages, deposits and business lending, as it also cut provisions for bad loans to an improving economic outlook. Net interest margins dropped sharply, as the lender felt the squeeze of fierce competition and a boom in fixed-rate lending.

The result is higher than market expectations of first half profits of $4.37 billion and an interim dividend of $1.72.Credit:Attila Csaszar

The bank raised its dividend by 17 per cent to $1.75 a share, and said it planned to return surplus capital by topping up last year’s massive off-market $6 billion buyback with a further $2 billion on-market buyback.

The result is higher than the market’s expectations of first half profits of $4.37 billion and an interim dividend of $1.72.

In the past year, CBA shares have risen 7.9 per cent and the stock closed at $94.30 on Tuesday.

While the bank has been expanding its already dominant position in retail banking, going into the result some analysts were concerned about a crunch on its profit margins due to stiff competition in the mortgage market and ultra-low interest rates.

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