Commonwealth Bank Lifts Dividend as Annual Profit Rises 7.1% — Update

By Stuart Condie

SYDNEY--Commonwealth Bank of Australia raised its dividend by more than expected as the lending giant lifted annual profit 7.1% on strong lending and deposit volumes.

Commonwealth Bank, which has a market capitalization of US$215 billion, on Wednesday reported a cash profit for the 12 months through June of 10.98 billion Australian dollars, equivalent to about US$7.75 billion.

Statutory revenue rose by 6.6% to A$30.15 billion and the bank's net interest margin, a key measure of lending profitability closely watched by analysts, rose by 2 basis points over the half to 2.05% against a backdrop of three interest-rate rises by Australia's central bank.

Net interest margin was 3 basis points lower than across the last fiscal year, although it rose by 1 basis point on an underlying basis.

The board lifted the final dividend to A$2.70, from A$2.60 a year earlier. Analysts had been looking for a payout of about A$2.66, according to data compiled by Visible Alpha.

The average analyst forecast had been for a cash profit of A$10.84 billion from revenue of just over A$30 billion.

Commonwealth Bank, which is the second-largest Australia-listed company by market capitalization after iron-ore miner BHP Group, said total lending grew by 7.1% across the year. Deposits rose 8.0%, increasing its deposit funding ratio to 79% from 78%.

Retail mortgage lending rose by 7.0% to A$12.3 billion despite application volumes starting to fall between the first and second of this year's rate hikes by the central bank.

Commonwealth Bank said application volumes appeared to have stabilized in recent weeks, but this month were still about 15% lower than prior to May's announcement by the government of changes to property related tax concessions.

Applications by property investors, who are the primary target of the change, were down by 28% since May, it added.

With higher rates and inflation weighing on customers, Commonwealth Bank's loan impairment expense rose to A$788 million, from A$726 million. Arrears in mortgages and personal loans both increased, although Commonwealth Bank said some of this was due to deliberate portfolio settings.

It said these settings helped it grow above industry rates in all five of its core domestic categories--home lending, business lending, consumer finance, household deposits and business deposits--for the first time in a full fiscal year.

"The Australian economy has remained resilient. However, growth is slowing, with higher interest rates and inflation placing uneven pressure on household incomes and economic activity," Chief Executive Matt Comyn said.

On a statutory basis, net profit rose by 7.4% to A$10.87 billion.

Write to Stuart Condie at stuart.condie@wsj.com

(END) Dow Jones Newswires

August 11, 2026 18:24 ET (22:24 GMT)