Commonwealth Bank of Australia (ASX: CBA) shares are weighing heavily on the ASX 200 index on Wednesday.
In morning trade, the banking giant's shares are down 4% to $171.63.
This follows the release of its full-year results before the market open.
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CBA shares tumble on results day
Investors have been hitting the sell button today after Australia's largest bank disappointed with its full-year results.
For the 12 months ended 30 June, CBA reported a 7% increase in statutory net profit after tax to $10,133 million and a 4% lift in cash net profit after tax to $10,252 million. The latter was broadly in line with the consensus estimate of $10,270 million.
Management advised that this reflects lending volume growth in its core businesses, stable underlying net interest margin, and a lower loan impairment expense, which was partly offset by higher operating expenses due to inflation and accelerated investment.
The bank's net interest margin (NIM) was 2.08% for the period. This is up 9 basis points year on year or 2 basis points on an underlying basis.
Management explained that, excluding the mix effect of lower liquid assets and institutional pooled facilities, margins improved by 2 basis points primarily due to higher earnings on capital and replicating portfolio hedges. This was partly offset by the impact of increased competition on deposit pricing.
In light of its profit growth in FY 2025, the CBA board elected to declare a final dividend of $2.60 per share. This meant an increase in its fully franked dividend by 4% to $4.85 per share for the year.
Its full-year dividend payout ratio is 79% of cash net profit after tax, which is near the upper end of its target payout range.
Commenting on the 12 months, management said:
This year we have continued to execute our strategic priorities, maintain strong operational performance and deliver consistently for our customers and shareholders. The operating context has been characterised by a rise in global macroeconomic uncertainty, increased geopolitical risk and continued domestic competitive intensity.
The team at Jarden wasn't overly impressed. In a note, courtesy of Dow Jones, the broker stated that it failed to justify the bank's lofty valuation. Nor does it expect to lead to meaningful positive revisions to analysts' earnings forecasts.
Outlook
The company's CEO, Matt Comyn, appears cautiously optimistic on the future. He said:
Despite global uncertainty, the Australian economy has remained resilient, with strong fundamentals including a healthy labour market, steady immigration and ongoing public sector investment. Even though sentiment remains subdued, we expect economic growth to improve modestly as the year progresses.
We will play our part to help the nation prosper by lending to productive parts of the economy, advocating for national policy settings that help build a brighter future for all Australians and maintaining conservative financial settings that ensure we are well prepared for a range of economic scenarios.
CBA shares remain up 30% since this time last year.
