Commonwealth Bank of Australia (ASX: CBA) Lifts Cash Profit 7% to $11 Billion

Commonwealth Bank of Australia reported higher full-year earnings and dividends as lending and deposit growth offset rising expenses and impairments.

Cash net profit after tax rose 7% to $10.98 billion for the year ended June 30, 2026. Statutory profit increased 8% to $10.91 billion, while pre-provision profit advanced 6% to $16.47 billion.

The result reflects CBA’s scale across Australian mortgages, business banking and deposits. The bank remains the main financial institution for one-third of Australians and one-quarter of Australian businesses. Its performance also provides a broad view of household credit conditions and cost pressures across the economy.

Growth Across the Franchise

Operating income increased 6%, supported by customer and volume growth. Underlying net interest margin was broadly stable, although the reported margin declined three basis points to 2.05%.

CBA grew at or above system across five core domestic product categories. These covered home lending, business lending, consumer finance, household deposits and business deposits.

The bank said no major Australian lender had achieved that breadth of growth during the past 15 years.

However, operating expenses climbed 6% to $13.76 billion. Inflation and spending on technology, fraud prevention, scams and financial crime drove the increase.

Investment spending rose 6% to $2.43 billion. CBA expects to maintain spending at about $2.4 billion in the 2027 financial year.

Dividends and Capital

The board declared a fully franked final dividend of $2.70 per share. That lifted the annual distribution 4% to $5.05 per share.

The full-year payout represented 77% of cash profit, within CBA’s target range of 70% to 80%. The dividend reinvestment plan remains available, with shares expected to be purchased on-market.

Return on equity rose 50 basis points to 14%. Meanwhile, the Common Equity Tier 1 capital ratio stood at 12%, above APRA’s 10.25% minimum requirement.

CBA’s $1 billion on-market share buyback expires on August 12, 2026, and will not be extended. The bank had completed $300 million of the program.

Credit Costs Move Higher

Loan impairment expense increased 9% to $788 million and jumped 47% from the first half. The loan-loss rate remained low at eight basis points.

Home-loan arrears rose to 0.73%, while personal-loan arrears reached 1.72%. CBA linked the increases to cost-of-living pressures, with seasonal factors also affecting personal loans.

Provision coverage remained 1.53% of credit risk-weighted assets. The bank carries a $2.7 billion buffer against losses expected under its central economic scenario.

Entering FY27

Deposit funding improved to 79% of total funding, supporting balance-sheet resilience. Liquidity and stable-funding ratios remained above minimum regulatory requirements.

CBA said economic growth is slowing as higher rates and inflation pressure household incomes. Housing activity has softened, although application volumes appeared to stabilise in recent weeks.

Management’s priorities for FY27 include deeper primary customer relationships, disciplined pricing and volume choices, and improved productivity. It also plans to measure the customer, risk and financial benefits from its investments.