The Commonwealth Bank has posted a record cash profit of $9.45 billion, up 3 per cent, a week after failing to pass on the Reserve Bank’s full rate cut to mortgage holders.
The bank made the announcement on Wednesday morning as part of its full year results for financial year 2015-16.
In the last six years, the bank has posted ever-increasing cash profits:
- $6.1 billion in 2009-10
- $6.8 billion in 2010-11
- $7.1 billion in 2011-12
- $7.8 billion in 2012-13
- $8.7 billion in 2013-14
- $9.14 billion in 2014-15
“We have pursued a simple, consistent strategy for over a decade now. Continued execution of that strategy, focused on customer satisfaction, innovation and strength, has again driven solid operating performance and balance sheet growth for the Group,” CBA chief executive Ian Narev said in a statement.
The result was close to the expectations of analysts, many of whom expected $9.5 billion.
Cash net profit after tax (NPAT) is the industry’s preferred measure. The result works out as cash earnings of $5.55 per share.
Customer deposits increased by 8 per cent ($40 billion) to $518 billion, which reflected the new reserve requirements imposed by the Australian Prudential Regulatory Authority (APRA).
While shareholders will surely be cheering, the huge profit is likely to intensify pressure on Mr Narev to explain why the bank reduced mortgage rates by 13 basis points, half of the RBA’s 25 point cut.
The CBA, along with the other big three banks, was strongly criticised by Prime Minister Malcolm Turnbull last week for not passing on the full cut.
“They operate with a very substantial social licence and they owe it to the Australian people and their customers to explain fully and comprehensively why they have not passed on the full rate cut and they must do so,” he said at the time.
“It’s not my job to manage the banks or tell them how to manage different products because they’ve all got different risk profiles and so forth, but it is absolutely clear that they have made a conscious decision not to pass on the full extent of the rate cut, and they should have done that.”
The Labor party, which is pushing for a bank royal commission, is reportedly expected to focus on the Commonwealth Bank’s failure to ease credit card rates despite bumper profits.