Commonwealth Bank Net Profit, Dividend Edge Up
By Robb M. Stewart
MELBOURNE, Australia--Commonwealth Bank of Australia (CBA.AU) posted a record first-half profit and boosted its dividend payout, yet fell short of expectations after booking provisions for anticipated compliance, regulatory and potential court costs.
The bank, Australia's largest by market value and the country's biggest mortgage lender, said Wednesday its net profit rose slightly to 4.91 billion Australian dollars (US$3.87 billion) in the six months through December from A$4.9 billion the year before.
Cash earnings, a measure tracked by analysts on ongoing operations and which is used as the basis for the lender's dividend payout, however, fell 1.9% to A$4.74 billion--below the A$5.20 billion median of eight analyst forecasts compiled by The Wall Street Journal.
Total income for the six months was 2.3% higher at A$13.14 billion, against A$12.84 billion the year before, excluding discontinued operations, and Commonwealth Bank said its net interest margin--a profit measure based on the difference between the rates at which a bank borrows and lends--widened 6 basis points on-year to 2.16%.
The Sydney-based bank said it would pay an interim dividend of A$2.00 a share, an increase of 1 cent on last year and short of the A$2.08 median expectation.
Weighing on profit for the period, Commonwealth Bank said it had set aside A$375 million as a provision for the potential penalty that could be imposed by a court in a civil suit brought by the country's financial-intelligence agency that alleges compliances breaches under the Anti-Money Laundering and Counter-Terrorism Financing Act. The bank has admitted a coding error led to the vast majority of the tens of thousands of instances of it failing to provide transaction reports on time, but plans to fight other accusations in court.
Commonwealth Bank said it also booked a A$200 million expense provision for expected costs related to regulatory, compliance and remediation programs, including a royal-commission inquiry into Australia's financial industry that will take place this year.
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(END) Dow Jones Newswires
February 06, 2018 16:15 ET (21:15 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.