Shares of CBA have jumped over 1% to $81.50 in early trade as the bank’s earnings report was slightly ahead of expectations, with no surprises, and with no mention of their current AML issues.
The bank announced a net profit of $9.9 billion with operating income up 3.8% and bad debt provisions down to a 9-year low of 15 basis points.
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A final dividend of $2.30 per share was announced, which lifted the total annual dividend to $4.29, compared to $4.20 last year. The EPS came in at $5.74 versus $5.55 a year ago.
The return on equity dropped 50 basis points to 16%, as net interest margins fell 3 basis points to 2.10%. CBA also announced plans to sell their capital-intensive life insurance business.
On balance, this was a positive report which will likely be overshadowed by the AUSTRAC allegations of wide scale AML and counter-terrorist financing breaches.
Technically, we still advise caution to the downside risk as the “lower high” pattern dating back to early May is still the dominant chart feature. We still see scope for a test of the June 7th low of $77.65 as a reasonable price target.
Commonwealth Bank
