Australia’s CBA posts record half-year profit, announces additional buy-back

(Reuters) -Commonwealth Bank of Australia posted a record cash profit for the half year and said on Wednesday it would buy back additional shares worth A$1 billion ($698.60 million) as a jump in interest rates helped fatten the lender’s margins.

The bank had announced a share buy-back of A$2 billion in February last year.

Banks typically earn more when interest rates rise because they can transfer the charges to customers who borrow. The Reserve Bank of Australia has raised rates by a cumulative 325 basis points (bps) since May last year.

The central bank last week raised its main policy rate by a quarter-basis point to a decade high of 3.35%, and flagged further hikes.

The country’s biggest lender said cash profit from continuing operations climbed to A$5.15 billion over the six months ended Dec. 31, from A$4.75 billion a year earlier, almost in line with a Visible Alpha consensus estimate of A$5.17 billion.

“Higher interim cash profits were a result of volume growth and the recovery in our margins as cash rates rise from historic lows,” said Chief Executive Officer Matt Comyn.

CBA reported a net interest margin of 2.10%, higher than the 1.92% a year earlier, driven by higher earnings on deposits and partly offset by increased competition in home lending.

It declared a bumper interim dividend of A$2.10 per share, higher than the A$1.75 a share it paid to shareholders a year earlier.

($1 = 1.4314 Australian dollars)

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