Here’s how Commonwealth Bank of Australia (ASX:CBA) and the rest of the big four banks performed in FY 2020…
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Last week saw the release of the National Australia Bank Ltd (ASX: NAB) full year result.
This was the last result from an incredibly eventful FY 2020 for the big four banks.
Here’s a summary of how they all performed during the last financial year:
Australia and New Zealand Banking GrpLtd (ASX: ANZ)
In FY 2020 ANZ reported a 40% decline in statutory profit after tax to $3.58 billion and a 42% reduction in cash earnings from continuing operations to $3.76 billion. This decline was driven primarily by full year credit impairment charges of $2.74 billion, which increased almost $2 billion year on year. These were largely due to the impact of COVID-19 and a first half impairment of Asian associates of $815 million, also related to the pandemic.
At the end of the period ANZ’s Common Equity Tier 1 (CET1) ratio remained strong at 11.3% and its net interest margin softened to 1.63%.
Commonwealth Bank of Australia (ASX: CBA)
For the 12 months ended 30 June 2020, Commonwealth Bank reported a 0.8% increase in operating income to $23,758 million. This was driven by volume growth in home lending and deposits, which offset a 2-basis point decline in its net interest margin to 2.07%. The bank’s statutory net profit after tax including discontinued operations was $9,634 million, up 12.4% on FY 2019. However, this statutory result includes significant gains on the sale of businesses. Whereas the company’s cash net profit after tax from continuing operations was down 11.3% to $7,296 million. This was driven largely by higher COVID-19 loan impairment expense.
At the end of June, Commonwealth Bank’s CET1 ratio stood at 11.6%.
National Australia Bank
For the 12 months ended 30 September, NAB reported a 36.6% decline in cash earnings to $3,710 million. This was driven partly by a number of notable items. If you were to exclude these items, the bank’s cash earnings would have been down 25.9% to $4,733 million in FY 2020.
NAB reported a 1 basis point reduction in its net interest margin (NIM) to 1.77% for the year due to its Markets & Treasury businesses, which felt the impact of holding higher liquid assets. Excluding this, its net interest margin was flat, with the benefits of home loan repricing and lower wholesale funding costs offset by impacts of the low interest rate environment and competitive pressures.
At the end of the financial year, NAB’s CET1 ratio was 11.47%, up 109 basis points year on year.
Westpac Banking Corp (ASX: WBC)
In FY 2020, Westpac posted a 66% decline in statutory net profit to $2,290 million and a 62% reduction in cash earnings to $2,608 million. Once again, this was driven by notable items. Excluding them, its cash earnings would have dropped 34% to $5,227 million.
At the end of the financial year, Westpac’s net interest margin was down 4 basis points to 2.08% and its CET1 ratio stood at 11.13%.
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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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