SYDNEY, August 12, 2026, 08:42 AEST – Commonwealth Bank of Australia CBA.AX reported its highest-ever annual net profit of A$11 billion, while also revealing a 47% increase in credit impairment charges.
- Cash profit increased by 7% to reach an all-time high of A$10.98 billion.
- Loan impairment charges for the second half rose by 47% to A$469 million.
- The full-year dividend totaled A$5.05, up 4% and fully franked.
Commonwealth Bank of Australia ASX:CBA reported an all-time high annual cash profit on Wednesday, but also revealed a more pronounced increase in credit costs. This divergence will provide an initial assessment for CBA shares as Sydney markets begin trading.
Cash net profit after tax increased 7% to A$10.98 billion. Statutory profit from continuing operations climbed to A$10.91 billion, up 8%. The bank reported growth matching or outpacing the financial system in all five key domestic products for the first time.
| FY26 measure | FY26 | FY25 | Change |
|---|---|---|---|
| Cash NPAT | A$10.98bn | A$10.25bn | up 7% |
| Total operating income | A$30.22bn | A$28.47bn | rise of 6% |
| Operating expenses | A$13.76bn | A$13.00bn | increase of 6% |
| Loan impairment expense | A$788m | A$726m | up 9% |
| Cash return on equity | 14.0% | 13.5% | climbed 50 bps |
The investor focus lies beneath the record headline. Impairment expenses climbed to A$469 million during the June half, up from A$319 million. This 47% rise significantly exceeded the 2% increase in profit over the half-year period.
| Half-year measure | 2H26 | 1H26 | Change |
|---|---|---|---|
| Cash NPAT | A$5.54bn | A$5.45bn | Up 2% |
| Pre-provision profit | A$8.34bn | A$8.13bn | Increased 3% |
| Loan impairment expense | A$469m | A$319m | Rose 47% |
| Home-loan 90+ day arrears | 0.73% | 0.63% | Higher by 10 bps |
| Personal-loan 90+ day arrears | 1.72% | 1.41% | Higher by 31 bps |
Management attributed the rise to portfolio expansion, greater cost-of-living strain and ongoing macroeconomic uncertainty. Home-loan arrears stayed low overall. Arrears for personal loans increased at a faster pace, with seasonal factors also contributing.
Chief Executive Matt Comyn stated that “Housing activity has softened from a high base.” He also noted that application volumes had seemed to level off during recent weeks. This is significant, as Westpac Banking Corporation ASX:WBC previously reported a 20% drop in mortgage applications following May’s budget. Reuters
CBA’s size continued to drive overall profit expansion. Business Banking recorded an 11% rise. New Zealand was the sole operating division to post a decrease.
| Cash profit by division | FY26 | FY25 | Change |
|---|---|---|---|
| Retail Banking Services | A$5.59bn | A$5.33bn | up 5% |
| Business Banking | A$4.54bn | A$4.09bn | up 11% |
| Institutional Banking and Markets | A$1.26bn | A$1.24bn | up 2% |
| New Zealand | A$1.11bn | A$1.20bn | down 7% |
Net interest margin stood at 2.05%, a decline of three basis points. Increased hedge income and an improved lending mix provided support. However, those benefits were counteracted by reduced lending margins.
Capital stayed strong, with the common-equity Tier 1 ratio measuring 12.0%, above the 10.25% regulatory minimum. CBA also maintained a A$2.7 billion provision buffer exceeding losses projected in its central economic scenario.
The board has announced a final dividend of A$2.70, raising the fully franked yearly distribution to A$5.05, an increase of 4%. CBA’s cash-profit payout ratio stayed at 77%, within the bank’s target range of 70% to 80%.
Valuation continues to be the bigger challenge. CBA ended trading on Tuesday at A$178.66, close to its 52-week peak of A$185.59. The consensus analyst target sits at A$122.86, indicating about 31% potential downside ahead of Wednesday’s update.
| Analyst | Recommendation | Target | Gap to A$178.66 |
|---|---|---|---|
| UBS Group NYSE:UBS | Sell | A$127 | -28.9% |
| Morgan Stanley NYSE:MS | Sell | A$125 | -30.0% |
| JPMorgan Chase NYSE:JPM | Sell | A$130 | -27.2% |
| CLSA | Sell | A$130 | -27.2% |
| 14-analyst consensus | Strong Sell | A$122.86 | -31.2% |
The stock dropped 2.1% on Monday after Westpac’s housing alert weighed on bank shares. It edged down a further 0.07% on Tuesday. The open on Wednesday will reveal if record earnings are enough to support that premium.
In the coming week, investors are set to monitor the ex-dividend date on August 19. They will also assess whether management’s statement that mortgage applications have levelled off holds true. The bank is forecasting investment outlays for FY27 to remain around A$2.4 billion.
Risks: An increase in rates may push up arrears and impairment charges. Robust capital and deposit funding offer some protection, yet CBA’s valuation risk remains.
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