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The Motley Fool Australia »Stock Market News» Commonwealth Bank (ASX: CBA) share price after USD 3 in focus9 billion half-year profit

James Mickleboro | 10 February 2021, 8:48 a.m. | More on: CBA

Commonwealth Bank of Australia (ASX: CBA) stocks are monitored today after Australia’s largest bank released its highly anticipated half-year results It will be interesting to see how the CBA stock performs as investors see the Digest numbers

The price of the CBA share will be in focus this morning after the bank announced for the on Jan. December 2020, the half-year ended with an operating profit of 11961 million USD that is down 0.05% year over year this was mainly due to the impact of COVID-19 and a 10 basis point reduction in the net interest margin to 2.01%, which offset the growth in core volume

Operating costs increased 23% for half to 5566 million USD This was due to higher capital spending, the impact of COVID-19, and higher volume-based spending
In terms of earnings, the Commonwealth Bank reported statutory net income after tax of $ 4$ 877 million, up 208% from the same period last year, primarily due to lower profits from the sale of companies

The net profit after tax from continuing operations decreased by 108% compared to the corresponding period last year to 3886 million Without the impact of COVID-19 and the cleanup costs, the bank’s cash profit would have been largely unchanged

From these proceeds, the board of directors of Commonwealth Bank declared a fully franked interim dividend of USD 50 per share, which corresponds to a payout ratio of 67% of cash profits

The Commonwealth Bank appears to have had a stronger result than the market expected, which could be a good sign for today’s CBA stock price

According to a release from Goldman Sachs, cash gain from continuing operations (pre-one-offs) was 3692 million USD and an interim dividend of USD 1 is forecast 25 per share

For the first half of fiscal 2021, the company recorded an impairment loss on loans of 882 million USD While this was higher than the corresponding period last year, it was down over 50% from the second half of fiscal 2020

The banknotes that home loan and consumer finance arrears will remain low and will be temporarily isolated through COVID-19 support measures

There are still around 25000 home loans with a balance of 9 billion USD deferred this is a drop from 145000 loans with a balance of 51 billion USD at the end of fiscal year 2020

At the end of the half year, provisions for impairment totaled $ 68 billion, representing 181% of credit risk-weighted assets

Nonetheless, the Commonwealth Bank remains well capitalized with a CET1 ratio of 12.6% This is from 116% at the end of fiscal 2020 and is well above APRA’s undeniably strong benchmark of 105%

Australia is relatively well positioned after assuming a position of financial and economic strength We have a solid pipeline of infrastructure projects, prospects for mining and agricultural exports are good and the community has benefited from significant government income support measures

While the outlook is positive, there are a number of health and economic risks that could slow the pace of recovery. We are prepared for a number of scenarios and have taken a careful approach in delivering them

We continue to closely monitor our loan portfolios for signs of stress. The low interest rate environment will continue to put pressure on our revenues, so we will continue to focus on performance, operational execution and capital allocation

The leading franchise and strong base of the bank make it well-positioned to face the challenges ahead. The strength of our balance sheet and capital position enables us to support clients and guide the country through the recovery Government, regulators and our industry peers work together to support initiatives that promote economic activity and employment

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James Mickleboro, contributor to Motley Fool, has no position in any of the stocks mentioned The Motley Fool Australia has no position in any of the stocks mentioned The Motley Fool has a disclosure policy This article provides general investment advice only (under AFSL 400691) Authorized by Bruce Jackson

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World news – AU – Commonwealth Bank (ASX: CBA) share price in focus after USD39 billion half-year profit