CBA profits up 23% as remediation costs fall

Commonwealth Bank of Australia has announced cash net profit after tax (NPAT) of $4.7 billion, up 23% on the first half of 2021.

In an announcement to the Australian Securities Exchange (ASX) of its half-year results to 31 December 2021, the big four bank said the NPAT had been supported by strong business outcomes, reduced remediation costs and lower loan loss provisions due to an improved economic outlook.

Remediations costs, which were $333 million at the end of June 2021, had “significantly” fallen to $93 million. This was due to a reduction in costs for aligned advice.

Operating performance was $6.6 billion, up 4% on the first half of 2021.

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The bank said it would pay an interim fully franked dividend of $1.75 per share, an increase of 17% from the same period a year ago and announced an on-market $2 billion share buyback.

It said it would continue to target an interim payout ratio of  around 70% of cash NPAT and 70%-80% for the final dividend.

Chief executive, Matt Comyn, said: "We expect the Australian economy to have a strong year in 2022 despite early challenges from the Omicron strain of COVID-19. Both the unemployment and underemployment rate are at the lowest since 2008, with high participation rates.

"Looking ahead, we will continue to invest in the business to extend our product offering to our retail and business customers and extend our digital leadership. We are well positioned to support business investment to build Australia's future economy."