The fall in earnings was blamed on its COVID-19 provisioning of $1.5 billion and the bank has warned that while the economic contraction caused by the pandemic was not as bad as first feared, it would take longer for the economy to recover.

It said its business lending was up $7 billion, home lending up $18.4 billion, and household deposits had increased by $25 billion.

Shareholders will receive a 98 cents a share final dividend, adding to the $2 first half dividend.

Managing director Matt Comyn said the bank’s statutory profit was up 12 per cent to $9.6 billion for the year but this was boosted by divestments.

“Our cash net profit after tax, which is more familiar to many of our shareholders, was down 11 per cent and that was mainly due to the $1.5 billion forward-looking adjustment that we took for future credit losses as a result of the coronavirus pandemic,” he said.

The bank has also had 135,000 home loan deferrals of which 18 per cent were in Queensland. The biggest impact was in NSW which was responsible for a third of the deferrals. There had also been 86,000 business loan deferrals, 17 per cent of which were in Queensland. The construction sector had the largest number of deferrals nationally.

Troublesome or impaired assets were now $8.7 billion but the bank said home loan and personal loan arrears were low, but credit card arrears were up.

Comyn said the economic outlook was still “highly uncertain”.

“Overall, Australia and New Zealand though are very well positioned, particularly so on a global basis. That said, we have seen a sharp economic contraction during the course of the year as a result of the pandemic. Not quite as bad as we’d first feared, but certainly the pace of recovery does look like it will be longer,” he said.

“Overall, we’re expecting GDP to fall by about 4 per cent over this calendar year, but to bounce back by about 2 per cent next year. “Unemployment is likely to peak towards the end of this calendar year at close to 10 per cent, which is clearly a significant
economic impact overall.

“But fortunately, again, Australia is well positioned. We’ve been able to provide substantial income support via the Federal Government, obviously working very closely with the states, regulators, financial institutions, to provide substantial support over that time.

He said the bank’s decision to slash dividends reflected advice from the Australian Prudential Regulation Authority that the dividend payout be less than 50 per cent of statutory earnings.

“The next few months will be critical and some sectors will take longer to recover than others. However, we remain positive about Australia’s long term prospects,” Comyn said.

‘There is a broad and wide range of infrastructure projects in the pipeline, and there are a number of other initiatives that are and will be required to make sure that we can try to bring that unemployment rate down in subsequent years.
“For the Commonwealth Bank, we feel very well positioned for a range of different economic scenarios.”