Commonwealth Bank records huge $10 billion yearly profit

Interest rate and tax cuts, combined with lower inflation, have given households more money to spend, a major bank says, after posting a huge annual profit on the back of better economic conditions.

Commonwealth Bank of Australia on Wednesday announced a $10.3 billion cash profit for 2024/25, up four per cent on the previous financial year.

Its bottom line result was broadly in line, at $10.1 billion to reflect an eight per cent improvement.

The boosted profit was driven by lending volume growth, a stable underlying net interest margin and lower loan impairment, offset by higher operating expenses.

CBA will pay a $2.60 final dividend, taking its total payout for the year to $4.85 per share, up four per cent from a year ago.

CEO Matt Comyn said the bank maintained a “prudent balance sheet”, which helped it withstand uncertainty and volatility over the year.

“The operating context has been characterised by a rise in global macroeconomic uncertainty, increased geopolitical risk and continued domestic competitive intensity,” he said in a statement.

The bank’s operating expenses weighed in at $12.9 billion in the year to June 30, for a rise of six per cent.

Higher operating costs were driven by inflation, a $900 million technology investment to handle the rise in scam and fraud activity, and more frontline lenders.

But economic conditions are improving with cost-of-living pressures easing, Mr Comyn said.

“Many households have seen a rise in disposable incomes due to the recent relief from reduced interest rates, lower inflation and tax cuts,” he added.

The bank still provided 139,000 tailored payment arrangements to help customers manage their mortgages and consumer finance repayments.

Mr Comyn said the year ahead should see modest economic growth with the bank maintaining “conservative financial settings” to survive any potential global impacts.

“Despite global uncertainty, the Australian economy has remained resilient, with strong fundamentals including a healthy labour market, steady immigration and ongoing public sector investment,” he said.

“We will play our part to help the nation prosper by lending to productive parts of the economy, advocating for national policy settings that help build a brighter future for all Australians.”

CBA shares ended at $178.80 at the close of trading on Tuesday.