Commonwealth Bank chief executive Matt Comyn has signalled his determination that the lender should try not to follow its major rivals in cutting its dividend.
Announcing a near 10 per cent fall in unaudited first-quarter profit, Mr Comyn said he was mindful that many people relied on CBA dividends for their income and would not prioritise one group of stakeholders over another.
“In a low interest rate environment we will continue to maintain a disciplined approach that delivers balanced outcomes for all our stakeholders, including over six million savings customers, 1.6 million home loan customers and 800,000 retail shareholders, including many retirees, who rely on our dividend,” Mr Comyn said on Tuesday.
Rivals Westpac and NAB both cut their interim dividends last week, both citing historically low interest rates as they were dragged down by the huge cost of remediating customers over various longstanding issues.
CBA on Tuesday declared unaudited cash earnings for the three months to September 30 of $2.26 billion.
That was five per cent up on the average of the preceding two quarters, the bank said in a trading update, but that was 9.6 down on the prior corresponding period’s $2.5 billion.
Mortgage lending rose 3.5 per cent over the quarter on an annualised basis, while household deposits grew 10.4 per cent.
Factoring in the $1.5 billion gain from August’s sale of Colonial First State Global Asset Management to Mitsubishi, unaudited statutory profit for the period rose 55 per cent on last year’s $2.45 billion to $3.8 billion.
“The bank remains well placed in a challenging operating environment, characterised by global macro-economic uncertainty and historically low interest rates,” Mr Comyn said.
Operating income rose three per cent on the average of the preceding two quarters, outpacing the two per cent growth in operating expenses, both excluding one-off items.
Troublesome and impaired assets edged slightly higher, with pockets of stress “similar” to those noted at the FY19 results in August, when the bank called out weakness in sectors linked to consumer spending, agriculture and construction, plus home loan impairments in WA and Queensland.
Commonwealth Bank has set aside $2.2 billion for remediation and related work, $1.2 billion of which is for customer refunds.
The bank on Tuesday said remediation work for aligned advisers between FY09 and FY18 is still ongoing, with a $534 million provision already recognised in August’s full-year results.