Senior Commonwealth Bank of Australia (CBA) executives have defended their record profits and addressed customers and shareholders at the bank’s 2023 general meeting on Wednesday.
Commonwealth Bank chairperson Paul O’Malley (pictured above right) reiterated the bank’s 2023 financial year results, which saw a cash net profit after tax of $10.2 billion, up 6% on the previous year.
“We returned $10 billion to shareholders via dividends and share buy-backs during the year,” O’Malley said. “Prudent capital management means our balance sheet remains strong. This strength has enabled us to support customers as well as deliver positively for you, our shareholders.”
The comments come after the major banks faced criticism after raking in nearly $30 billion collectively as borrowers faced the steepest interest rate rise on record.
CBA CEO Matt Comyn (pictured above right) said an area of focus for many people has “understandably” been CBA’s profit.
“Ultimately, the size of the profit is a function of being Australia’s largest bank,” Comyn said.
“Today, over 17 million customers choose to bank with us, and we’re trusted to look after $900 billion of their savings and manage nearly $1 trillion in loans,” he said.
“This year we lent $35 billion to small businesses to help them grow, helped 150,000 people buy a new home, and helped depositors earn nearly $11 billion in additional interest income.”
“Over 12 million Australians also own shares in CBA, as most Australians own part of CBA, directly or through their super fund.”
However, detractors had argued that the bank had cashed in by aiming to increase its net interest margin (NIM) through each rise in the cash rate.
Being the biggest bank in Australia, with 35% of Australian consumers and over 25% of Australian businesses considering CBA as their main financial institution, Commonwealth Bank has a variety of initiatives to justify its profits.
O'Malley highlighted CBA's commitment to sustainability, including its net-zero goal by 2050, its Climate Report, and its $70 billion Sustainability Funding Target by 2030, of which $44 billion has already been funded.
O’Malley also pointed to the bank’s commitment to no longer provide project finance to new or expanded oil and gas extraction projects.
“We’ve clarified our expectations for certain customers to have published transition plans from 2025,” O’Malley said. “Our scale and position means we are well placed to help Australia transition to a more resilient and sustainable economy.”
Commonwealth Bank’s Reconciliation Action Plan (RAP) and Next Chapter initiative, which the latter has helped almost 5,000 victim-survivors of domestic and financial abuse, were also spoken about in detail by O’Malley.
Overall, both Comyn and O’Malley recognised the challenges in the economy for Australians.
Comyn said the bank has contacted every customer coming off a fixed rate mortgage to discuss options, as well as “providing flexibility and financial assistance for those who need it”.
“The rising cost of living continues to impact many of our customers,” said Comyn.
However, O’Malley said while many Australians are under pressure in the current environment, “most of our customers remain well positioned”.
“We continue to see only a small number of customers falling behind on repayments. Many customers have been able to take practical steps to adapt to the higher rate environment,” O’Malley said.
Looking ahead, Comyn said the fundamentals of the Australian economy “remain strong”.
At the same time, we recognise that the impacts of higher inflation and higher rates are being felt unevenly across customers and the economy.
“We expect pressure on households to ease as inflation continues to moderate. The economy remains fundamentally sound, and we remain optimistic about the outlook,” Comyn said.
“We are well provisioned for the changing financial conditions and our strong balance sheet provides flexibility to navigate the current environment and support our customers while delivering sustainable returns.”
O’Malley thanked the CBA board, which supports the re-election of non-executive directors Rob Whitfield AM and Simon Moutter.
Genevieve Bell AO will retire from the Board on October 31, 2023, to take up her new role as vice chancellor of the Australian National University.
“On behalf of the Board, I would like to thank Genevieve for her significant contribution to CBA during her tenure,” O’Malley said. “Genevieve's skills and experience have been extremely valuable to the Board. We congratulate Genevieve on her appointment as Vice Chancellor.”
