CBA pumps out $2.1 billion

Advertisement
atm_21

From BBY on the CBA earnings update:

NPAT of $2.1bn implies higher rate of profitability than BBY FY14 forecast of $8.1bn. Expected rate of increase in BDD charges not coming through – $228m for 1Q was flat on good 2H FY13 performance. BDD charge is tracking at $900m vs BBY FY14 estimate of $1.2bn – room for upgrade here. Income growth is on track for 4% pa (consistent with BBY forecast) while expense growth is slightly lower (again in line with BBY expectations). NIM was down slightly from a good 2H FY13 with trading income remaining at relatively strong levels (contrast to WBC and NAB). Mortgage market share growth was slightly above market suggesting CBA is giving up a little on price to secure better share. CBA saw a decline in impaired assets in the period to $4.28bn, strong provisioning levels and coverage ratios have been maintained. In short stronger profit momentum seen in 4Q FY13 maintained in 1Q FY14 (3Q FY13 $1.9bn, 4Q FY13 $2.1bn, 1Q FY14 $2.1bn).

Summary: maintain BUY. Earnings upgrade of approx. 4% primarily due to lower bad debts

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.