The bank cited increased competition, lower deposit earnings from the competition, and unfavourable portfolio mix as among the reasons for the decline.
Commonwealth Bank of Australia’s (CBA) statutory net profit after tax (NPAT), which includes one-time, exceptional items, fell 6 percent to $9.48 billion in fiscal 2024, attributed to lower lending and deposit margins.
The company said the results were due to increased competition, lower deposit earnings from the competition, unfavourable portfolio mix primarily from customers switching to higher-yielding deposits, and increased wholesale funding costs.
In terms of cash NPAT figures, it saw an overall decline of 2 percent to $9.84 billion (US$6.5 billion), while its retail banking services segment slid 4 percent to $5.36 billion.
Moreover, business banking grew 4 percent to $3.77 billion and institutional banking and markets rose 5 percent to $1.1 billion.
“The Australian economy remains resilient with low unemployment, continued private and public investment, and exports supporting national income. Higher interest rates are slowing the economy and gradually moderating inflation,” said Matt Comyn, chief executive of CBA.
“Australia remains well positioned but downside risks continue around productivity, housing affordability, as well as ongoing global uncertainty.
“We will play our part in stimulating economic growth by lending to productive parts of the economy.”
CBA will pay $4.65 per share, fully franked, for the full year dividend, which comes to an increase of 3 percent from the previous year.
ASB Suffers from Low Market Growth
Meanwhile, the cash NPAT of the bank’s New Zealand operations under the ASB brand dropped 10 percent to $1.19 billion.
The company attributed the decline in its New Zealand profit to challenging economic conditions with ASB’s home, business, and rural lending growing by only 1 percent.
ASB’s total customer deposits, however, inched 5 percent higher.
“The majority of our borrowers are managing in the current environment, although there is no question this is a challenging time for a lot of New Zealanders. We’re hearing this in conversations with our customers, whether they are personal banking customers, farmers or business owners,” said Vittoria Shortt, chief executive of ASB.
“We are seeing an increasing number of our customers needing extra support and our teams are assisting these business and personal customers in a variety of ways, depending on their individual circumstances.”
ASB implemented various initiatives during the year to help the country’s productivity and support social and environmental transformation.
These included the launching of the Accelerated Housing Fund, partnering with Rewiring Aotearoa to investigate barriers and opportunities around the transition of homes and farms to renewable energy.
The initiatives also included the launch of the Clean Tech Fund for early-stage companies targeting a reduction in emissions and improving use of natural resources.
The bank also invested in AgriZeroNZ to help farmers lower agricultural emissions while maintaining profitability.