The S&P/ASX 200 (ASX: XJO) finished at another record on Wednesday, adding 0.3% with the Commonwealth Bank of Australia (ASX: CBA) extending its dominance as Australia’s largest company. The CBA share price rallied 1.5%, almost singlehandedly pushing the market higher.
Outside of the major banks it was a generally risk-on day with energy and miners also rallying following a strong report from Mineral Resources Limited (ASX: MIN), which sent competitors including Orocobre Limited (ASX: ORE) up 6.3%.
Technology continues to be sold off with Megaport Ltd (ASX: MP1) the worst performing following a broker downgrade. Megaport shares dropped 6.3%.
CBA hikes dividend
But all eyes were on CBA’s FY21 result, with the bank managing to double its 2020 dividend despite reporting revenue growth of just 2% to $24 billion. Profit improved 6% to $10 billion with the final dividend back to $2 per share and $3.50 for the full year; a stark improvement from last year’s $2.98.
Where many competitors raised capital in 2020, CBA avoided doing so and is now undertaking a $6 billion off-market share buyback in an effort to distribute some $2.1 billion in excess franking credits to shareholders; this will be highly attractive for those holding shares in superannuation.
On the negative side, net interest margin continued to weaken as the RBA’s support was removed and digital investment was increased as they are face with growing fintech challengers.
Franking credits explained
Insurance hurts
Insurance Australia Group Ltd’s (ASX: IAG) FY21 report evidenced the incredibly difficult business model faced by insurers, delivering a $427 million loss sending shares down 2.7%.
The group saw revenue increase just 1.7% to $18 billion with profit hit by a spike in injury claims, customer and staff remediation from underpayments.
Management is hopeful these are in the past and the future looks bright, but it appears the difficult conditions will continue.
On the positive side, Challenger Ltd (ASX: CGF) jumped 4.6% after investors were able to digest Tuesday’s improving result.
SEEK’s split
SEEK Limited (ASX: SEK) has confirmed it will move its online education and venture capital businesses into a separate unit trust, valued at $1.415 billion.
The group is looking to raise an additional $460 million from external investors; shares were down 1.5%.
Lithium booms but costs increasing
Finally, Mineral Resources continued its record run, delivering all-time highs in tonnes produced, shipped, revenue and profit.
Earnings were up 150% to $1.9 billion and profit doubled to 230 per cent to $1.1 billion. The dividend was doubled but the Mineral Resources share price remained flat.
ASX 200 today
The ASX 200 is set to edge higher when the market opens on Thursday. All eyes will be on the likes of Telstra Corporation Ltd (ASX: TLS) and National Australia Bank Ltd (ASX: NAB) with both set to release results. For all the latest, make sure to bookmark Rask Media’s ASX reporting season calendar.
