CBA posts record profit as borrowers feel the pinch
The strong results mean the bank is well placed to manage economic headwinds, CEO Matt Comyn said
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The Commonwealth Bank has credited its continued focus on supporting customers and investing communities for its record $10.2 billion profit.
Releasing the full financial year 2023 results this morning, the six percent increase in cash net profit after tax comes in the midst of rising inflation, higher interest rates and a cost of living crisis.
The CBA said in a statement that it had funded $149 billion of new lending as Australia’s largest home lender, helping 150,000 Australians to buy a home. It also noted that CBA has provided Australian businesses with $35 billion of new lending, with one in four small and medium size businesses now CBA customers.
It’s good news for shareholders, with return on equity up 14 percent resulting in a dividend per share of $4.50.
Acknowledging that some borrowers were facing financial challenges following a 4 percent interest rate rise in just over a year and increasing cost of living pressures, Commonwealth Bank CEO Matt Comyn said the results demonstrated a resilient banking system and provided stability for the wider Australian economy.
“It has been an increasingly challenging period for our customers, dealing with rising cost of living pressures,” said Mr Comyn. “Our balance sheet resilience allows us to support our customers and deliver sustainable returns for shareholders.”
He said the CBA would continue to monitor the impact of a slowing economy and reduced discretionary spend, particularly on small business.
“The Australian economy has been resilient with the tailwinds of a recovery in population growth, relatively high commodity prices and low unemployment,” Mr Comyn said. “However, there are signs of downside risks building as rising interest rates have a lagged impact on mortgage customers and other cost of living pressure become a financial strain for more Australians.
“The Australian banking system remains strong and has navigated rapidly changing and uncertain global financial conditions through sound liquidity risk management and strong capital regulation.”
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The federal budget has rattled property investors. But the biggest mistake isn’t the tax changes, it’s the conclusion many are drawing from them.
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The recent budget has forced a reckoning for property investors.
Negative gearing now restricted to new residential builds, the CGT discount gone and on paper, the numbers look different.
And many investors are responding by pivoting toward yield, prioritising cash flow over capital growth in a way that property strategists say misses the point entirely.
“The debate has shifted to yield versus growth as if they are opposing forces,” says Abdullah Nouh, founder of Melbourne-based buyers’ agency Mecca Property Group. “But that framing is itself the mistake.”
Nouh, who works with high-net-worth families and investors on long-term acquisition strategy, argues that capital growth remains the primary driver of genuine wealth creation and that the post-budget environment has made quality assets more important, not less.
The numbers make his case plainly. An additional $500 per week in rental income is welcome. A prestige asset appreciating by $1 million over a market cycle is transformative.
These are not equivalent outcomes, and portfolios built around yield at the expense of location and land value tend to generate income while wealth stands largely still.
The more nuanced shift Nouh is seeing among sophisticated investors is a move toward assets where both outcomes can be engineered simultaneously – established homes on substantial land in quality locations, where the existing dwelling can be repositioned, rental returns improved, and the underlying land value compounds independent of what sits on it.
For investors with existing equity, commercial property is also entering the conversation in a more serious way.
Prestige industrial assets, medical centres and long-leased essential retail offer income profiles that residential property in most capital city markets cannot currently match: longer lease terms, tenants covering outgoings, and greater predictability than the residential tenancy cycle.
“The investors who build lasting wealth are rarely the ones who chased yield or growth exclusively,” says Nouh.
“They are the ones who built a strategy they could sustain – one that generated enough income to hold quality assets through multiple cycles while those assets compounded in value.”
The budget has changed the settings. It has not changed the fundamentals.
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