CommBank shares drop despite $2.6b quarterly profit
Commonwealth Bank has announced an eye-popping first quarter cash profit of $2.6 billion, boosted by growth in home loans and deposits.
Despite the result, which puts Australia’s largest company on track to surpass its record $10 billion profit in 2025, investors dumped CBA shares, which fell 3.7 per cent to $168.51 in early trade.
High valuations in Australia’s heavily entrenched financial sector have led analysts to question the source of future growth.
The CBA’s result was one percent above the recent average and a two percent increase over the same quarter in 2024.
Operating income increased by 3 percent due to the growth in loan and deposit volume.
CBA chief executive Matt Comyn said households and businesses still faced significant cost pressures but the bank was committed to supporting customers.
“Despite increasing geopolitical and macroeconomic uncertainty, we remain optimistic about the country’s outlook,” Mr. Comyn said.
“We are closely monitoring increased competitive intensity and its consequences across the financial system and will continue to adjust our settings as appropriate.”
IG Markets analyst Tony Sycamore said the negative investor outcome came despite results tracking with forecasts, but an unquantifiable contraction in CBA’s net interest margin (the difference between a company’s interest costs and its returns) was causing concern.
“Additionally, the stock remains expensive by some metrics, despite pulling back from late June highs of $192.00,” he said.
CBA has a total value of over $281 billion and employs approximately 50,000 people.
CommBank’s much smaller rival Bendigo and Adelaide Bank also sold off following Tuesday’s report, with its shares falling 3.2 per cent to $12.32.
The decline was easier to understand than CBA’s after its cash earnings fell 3.2 per cent to $120.7 million in the September quarter.
Managing director and chief executive Richard Fennell said Bendigo’s balance sheet remained well positioned for a return to growth in the second half.
“During the quarter, we achieved several strategic milestones that will position the bank for sustainable growth in the second half of this financial year and beyond.
Australian banks have received mixed reactions to the latest financial updates; NAB shares have lost more than four per cent, while Westpac has gained 3.6 per cent since announcing its full-year results.
ANZ shares have hit record highs, up almost five per cent since its report; The smallest of the big four banks has gained power by taking a tough stance on executive bonuses and matching the high price tags of rivals.
Shares in investment giant Macquarie Group tumbled almost six per cent after first-half profit fell more than ten per cent below expectations, with a depreciation in commodity prices and wind assets weighing on the outcome.
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