It is going to be a big week for Commonwealth Bank of Australia (ASX: CBA) shares and its shareholders.
That's because on Wednesday, the banking giant will be releasing its full year results and revealing its profits and dividend for FY 2024.
But just how big will these be for the year? Let's find out.
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How big will CBA's profits and dividend be?
According to a note out of Morgans, its analysts are expecting the banking giant to report a small half on half decline in cash profit for the second half.
It is forecasting its pre-provision operating profit and cash earnings per share to be 3% lower compared to the first half. This would mean approximately $4,868.43 million and $2.91 per share, respectively.
This would bring its full year cash profit for FY 2024 to approximately $9,887.4 million.
As for the CBA dividend, Morgans is expecting the bank to declare a final fully franked dividend of $2.40 per share. This will be flat on the prior corresponding period, bringing its full year dividend to a fully franked $4.55 per share.
This will be a 5 cent or 1.1% increase on the $4.50 per share dividend CBA paid to shareholders in FY 2023.
What else should you look out for?
Morgans has named four other things to look out for when the banking giant releases its results.
The first is its loan growth and net interest margin (NIM). It said:
Loan Growth and NIM: Loan growth is expected to strengthen, while the decline in Net Interest Margin (NIM) is anticipated to moderate.
Costs will be another thing to keep an eye on. It adds:
An increase in costs is projected, primarily due to higher amortisation and staff expenses.
Morgans expects CBA's asset quality to remain strong. The broker explains:
Asset quality is likely to remain resilient, with low write-offs and minimal provisioning growth, potentially surpassing consensus expectations.
Finally, the broker thinks investors should be looking out for capital returns. It highlights that CBA has only returned a small amount of its excess capital. It said:
Watch for how CBA plans to distribute excess capital, given it spent only $130 million on share buybacks in 2H24.
Should you invest?
While Morgans doesn't necessarily think investors should be selling off all their CBA shares, it also doesn't think investors should be buying them right now due to their lofty valuation. It commented:
The REDUCE rating we apply to CBA is not a recommendation for complete divestment; rather, it is a directive to reduce overweight positions. Given current valuations and earnings outlook, it is difficult to foresee substantial returns from investments in CBA over the next 3-5 years. Loan growth is expected to strengthen, and the decline in Net Interest Margin (NIM) may moderate. However, cost pressures are anticipated from increased amortisation and staff expenses and upward normalisation of credit impairment charges.
Asset quality remains resilient, with low write-offs and limited provisioning growth potentially seeing credit impairment expenses being lower than consensus estimates. For 2H24, we project pre-provision operating profit and Cash EPS to be 3% lower than 1H24, and the DPS remain flat on pcp at $2.40 per share with an increasing payout ratio. Capital management will be a focus, with CBA undertaking only minimal share buyback activity ($130 million in 2H24) to distribute excess capital.
