ASX-listed Commonwealth Bank of Australia (AU:CBA) increased its dividend for FY24 despite posting a 6% year-over-year dip in its statutory NPAT (net profit after tax) to AU$9.5 billion. The bank declared a final dividend of AU$2.50 per share, taking its full-year dividend to AU$4.65 per share. This marked a 3% year-over-year growth in the FY24 dividend. CommBank shares gained 1.28% in today’s trading session.
CommBank is a leading Australian bank with global operations, offering a wide range of banking and financial services.
CommBank’s Profits Hit by Fierce Competition
In FY24, CommBank’s cash NPAT was also down by 2% to AU$9.8 billion compared to the previous fiscal year. Although profits were supported by growth in core business areas, they faced pressure from lower lending and deposit margins due to intense competition in the retail and mortgage sectors. In recent years, Australian banks have fiercely competed for higher market share in the home loan sector, which has affected margins.
Meanwhile, FY24 net interest margin fell 8 basis points to 1.99%. As a result, CBA’s net interest income dropped by 1%.
Among its segments, the bank’s Retail Banking Services (RBS) unit, reported a 3% year-over-year decline in full-year cash NPAT to AU$5.36 billion. This segment accounts for 54% of the total net profits. On the other hand, Business Banking’s (BB) cash NPAT increased by 4% to AU$3.77 billion.
Are CommBank Shares a Good Buy?
Following the results, analysts from Macquarie, Citi, and Goldman Sachs reiterated their Sell ratings on CBA stock, predicting more downsides.
Overall, CBA stock has received a Strong Sell rating on TipRanks, based on nine Sell recommendations. The CBA share price target is AU$97.89, which is 27% lower than the current share price.
