On Wednesday, Commonwealth Bank of Australia, the country's largest lender, reported a slight increase in first-half profit, thanks to a strengthening economy that allowed for a reduction in loan impairment charges. This sent its shares to a record high.
Despite a challenging period for its customers due to a cost of living crisis in the past two years, the bank noted that income tax cuts and rising wages had led to increased savings and spending. It mentioned a 15% decrease in loan hardship cases from June to December, with most borrowers still being ahead on repayments.
CEO Matt Comyn stated, "We expect Australia will follow offshore economies with an easing cycle starting in 2025, providing relief to households and boosting business confidence."
The cash net profit rose 2% to A$5.1 billion ($3.2 billion) in the six months to end-December, supported by a 23% drop in loan impairment charges, slightly surpassing expectations. Excluding this drop, profit would have remained nearly unchanged.
The bank declared an interim dividend of A$2.25 per share, marking its highest first-half payout ever. CBA shares reached an intraday peak of A$164.71, up 1%, in midday trading, continuing a year-long upward trend.
While meeting market expectations, Citi analysts noted, "we don't see anything to justify the recent share price run," as CBA's costs rose by 6%, attributed to investments in technology infrastructure and AI capabilities.
The lender's net interest margin increased by 2 basis points to 2.08%.