CBA (ASX: CBA) has reported its result for the first quarter of FY20 which showed growth.
Commonwealth Bank of Australia or CBA is Australia’s largest bank, with commanding market share of the mortgages (24%), credit cards (27%) and personal lending markets. It has 16.1 million customers, 14.1 million are in Australia. It is entrenched in the Australian payments ecosystem and financial marketplace.
CBA’s First Quarter Of FY20
The big four ASX bank reported that in the first quarter of FY20 its continuing operations cash net profit excluding notable items of $2.3 billion rose by 5% compared to the average quarter profit of the second half of FY19.
The result was driven by both operating income increasing by 4% and operating expenses rose by 2% excluding notable items.
Including notable items the reported expenses fell by 9% due to the customer remediation in the second half of FY19. Including notable items, cash net profit rose by 18% because this quarter didn’t include any customer remediation.
Statutory net profit of $3.8 billion for the quarter included a $1.5 billion gain on the sale of Colonial First State Global Asset Management (CFSGAM) which completed 2 August 2019.
CBA reported a loan impairment expense of $299 million in the quarter, which equated to 0.16% of gross loans and acceptances. However, troublesome and impaired assets of $8.1 billion was 4% higher than at June 2019 and 22.8% higher than September 2018.
The bank said that there are pockets of stress similar to those highlighted in the FY19 result.
However, in terms of consumer arrears there was improvement across the spectrum compared to June 2019. Personal loans 90+ day arrears improved 0.13% to 1.43%, credit cards improved 0.14% to 0.88% and home loans improved 0.04% to 0.64%.
During the September 2019 quarter, home lending volume grew at an annualised 3.5%, household deposits grew by 10.4% and business lending grew by 2.8%.
The major bank reported a CET1 ratio of 10.6% after the final FY19 dividend which reduced the ratio by 0.90% and organic generation of 0.35% excluding one offs.
CBA CEO Matt Comyn said: “The Bank remains well placed in a challenging operating environment, characterised by global macro economic uncertainty and historically low interest rates.”
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