The return of funds to shareholders appears to be a theme for the profit reporting season as companies look for ways to deal with bulging treasuries.
The banks have more money than they can handle. ANZ has previously announced a $1.5 billion buyback, the NAB $2.5 billion and Suncorp $250 million. The buybacks benefit investors by not only providing a payout for those who want it but also increase the value of shares that remain on the market.
The CommBank’s total dividend equates to a distribution of $6.2 billion of the full year profit, plus the $6 billion off-market buy-back. Today’s announcement was worth almost $10 billion.
The real estate boom has been a big factor in the bank’s performance. Home lending was up $31 billion to $492 billion and deposits increased by $31 billion to $310 billion.
Loan impairments were also down significantly and the bank said Australia still faced near-term challenges but it expected a rebound in the economy later this year.
It said there was “significant accumulated household savings”
Chief Executive Officer Matt Comyn said the payout was a reflection of the success of executing the bank’s strategy as well as the ongoing strong operational performance of the core businesses of retail, business and institutional banking.
CommBank has also sold assets worth $6 billion since 2018.
“Looking ahead, we anticipate ongoing economic impacts and earnings pressure from lower interest rates,” he said.
“We will continue to invest in the business to reinforce our product offering to our retail and business customers and extend our digital leadership.
“We are prepared for a range of different economic scenarios and are well placed to support our customers.
“We’re committed to new and ongoing support measures for those most impacted by COVID-19 and other events. We will continue to work closely with our retail and business customers to understand their needs.”
He said the bank would remain focused “on continuing to make progress on our more ambitious strategy”
Earnings per share based on the cash profit from continuing operations was $4.89, up 80 cents on last year.
Operating income was up 1.7 per cent on the prior year to $24.16 billion. Operating expenses rose by 2.4 per cent to $10.78 billion excluding remediation costs, reflecting investment in the franchise and higher volumes.