Commonwealth Bank warns economy still fragile as | Australian Markets

Commonwealth Financial institution of Australia will bathe its shareholders in a supersized dividend after reporting a money revenue of $5.13 billion for the primary half of the financial yr, buoyed by power in its powerhouse home lending business.

That beat market estimates of simply over $5b, and the bank can pay out $2.25 a share to traders — up 5 per cent on the identical time a yr in the past.

Chief government Matt Comyn on Wednesday mentioned he anticipated the Reserve Financial institution to begin its charges easing cycle quickly and offer long-awaited reduction to tens of millions of Australia’s struggling debtors. However he warned financial circumstances stay fragile.

“The Australian economy has slowed considerably, with cost of living pressures continuing to weigh on consumer demand and younger customers in particular making real sacrifices,” Mr Comyn mentioned.

“Private sector growth is weak, immigration is starting to slow and geopolitical uncertainties remain.

“However underlying inflation is now moderating towards the target range and we expect Australia will follow offshore economies with an easing cycle starting in 2025. This should provide some relief to many households and improve business confidence.

“The strong labour market and level of ongoing public sector infrastructure spend also provide cause for optimism on the domestic economic outlook.”

CBA’s money revenue was up 2 per cent on a yr earlier and seven per cent on the final half of 2023/24.

The end result was supported by quantity growth in its core companies and a decrease loan impairment expense, partly offset by greater working bills attributable to continued inflationary pressures and a discretionary increase in franchise investment spend.

A fee cut from the RBA at subsequent week’s assembly may trim margins within the extremely aggressive home loan market, the place CBA stays the largest participant.

Mr Comyn mentioned it had been a difficult yr for a lot of clients and the bank had been proactive in engagement to offer a vary of help choices.

“This has included improved access to hardship assistance, delivery of money management tools for greater visibility of finances, and tailored payment arrangements for those customers most in need,” he mentioned,

CBA reported client arrears remained broadly steady, supported by stage 3 tax refunds which come into impact in July final yr and modifications to income tax charges and thresholds.

It mentioned the bulk of mortgage clients stay upfront of scheduled repayments.

Bills continued to grow, largely attributable to outlays for its continued investment in technology, together with generative artificial intelligence and knowledge infrastructure.

“Our balance sheet settings remain strong, with surplus capital and conservative funding, provisioning and interest rate risk settings,” Comyn mentioned.