By James Frost and James Eyers


Commonwealth Bank of Australia will return almost $10 billion to shareholders through buybacks and dividends after reporting a 19.8 per cent increase in cash profit to $8.65 billion, as it expects the economy to rebound later this year.

The full-year result has been underpinned by strong housing markets and demand for capital by companies, with double-digit net profit growth across its key divisions of retail and business banking and a steep reduction in loan impairments and provisions.

The bank will also start a $6 billion off-market buyback supported by $2.1 billion in franking credits as foreshadowed by The Australian Financial Review on Monday. CBA’s shares rose 1.6 per cent to a record $108.26 on the capital management moves; at 12.30pm AEST, the shares were up 1.4 per cent at 107.96.

Loan impairments fell 78 per cent to $554 million in the year ended June 30 from the previous year’s $2.5 billion of impairments, with the bank pointing to a vast improvement in the underlying economic conditions, while also maintaining a provision coverage ratio of 1.63 per cent for ongoing uncertainty.

“It’s a bloody good result from CBA and it’s hard to pick too many holes in it,” said Matthew Haupt, Wilson Asset Management portfolio manager.

“Standouts were the strong credit growth, such as taking market share. The buyback exceeded market expectations by a billion dollars or so. Cash profit was a beat. Capital is still incredibly strong. The quality wasn’t as good, but it’s still a beat. They have been conservative compared with rivals.”

Read more in the Australian Financial Review.