The Commonwealth Bank of Australia (ASX: CBA) share price is under the spotlight after the ASX bank share reported its FY25 result.
FY25 result
Here are the main highlights from the CBA FY25 report for the 12 months to 30 June 2025:
- Operating income increased 5% to $28.5 billion
- Operating expenses rose 6% to $13 billion
- Pre-provision profit grew 3% to $15.5 billion
- Cash net profit increased 4% to $10.25 billion
- Statutory net profit after tax (NPAT) rose 7% to $10.1 billion
- Final dividend per share of $2.60, up 4%
- Full-year dividend per share of $4.85, up 4%
The business reported that its operating income grew thanks to a disciplined approach to loan volume growth with a stable underlying margin.
While its home lending and retail deposit growth was approximately the same speed as the overall financial system growth, its business lending grew at 1.3x the system, which is a promising sign that it’s gaining market share.
The operating costs grew slightly faster because of inflation and an accelerated investment in technology, additional frontline lenders & operational resources, partly offset by productivity initiatives. Investment spending increased 14% year on year to $2.3 billion. That spending is modernising its technology infrastructure and enhancing its generative AI capabilities.
CBA noted its return on equity (ROE) declined by 10 basis points (0.10%) to 13.5%.
Net interest margin
A net interest margin (NIM) tells investors how much lending profit a bank is making on its loans, comparing the loan rate to the funding of that loan (with savings accounts and so on). It’s a key metric for the CBA share price.
CBA’s NIM increased 9 basis points (0.09%) compared to FY24 to 2.08%. Excluding “the mix effect of lower liquid assets and institutional pooled facilities, margins improved” by 2 basis points (0.02%).
The NIM increased mostly because of “higher earnings on capital and replicating portfolio hedges”, partly offset by increased competition for deposits.
Loan quality
The ASX bank share reported a loan impairment expense of $726 million, a decrease of 9% compared to FY24. This reflected lower losses and improved economic conditions.
However, there are also rising global trade and geopolitical tensions.
Pleasingly, home loan arrears stabilised in the June quarter and 85% of home loan customers are now in advance of their scheduled repayments.
Outlook for the CBA share price
The bank noted that the Australian economy has remained resilient, with strong fundamentals such as a healthy labour market, steady immigration and ongoing public sector investment.
It’s expecting economic growth to improve “modestly” as the year progresses.
Overall, CBA has shown strength and stability during the last few years, while also providing a growing dividend.
However, the CBA share price seems to me to be priced very highly for a business that grew pre-provision profit by just 3% and its retail banking segment is only growing at the same speed as the rest of the market.
I’d be satisfied if I were a long-term shareholder, but I wouldn’t buy CBA shares today. There are plenty of other ASX dividend shares that appeal more.
