Commonwealth Bank boss Matt Comyn’s $10.4 million payday revealed

Commonwealth Bank head Matt Comyn has received an eye watering $10.4 million pay packet in the year to June, with the bank boss awarded almost $8 million in bonuses.

Mr Comyn’s take home pay equates to 110 times more than that of a typical worker.

The revelation comes after Australia’s largest retail bank, has posted a record cash profit of $10.16bn despite issuing warnings that its customers are coming under increasing pressure.

Commonwealth Bank’s 2022-23 result was up 6 per cent, driven by expanding profit margins after soaring interest rates pushed the bank to hike variable mortgage repayments 10 times in that period.

Since May last year, Australian households have been hit with 12 interest rate hikes, skewering household budgets. With the cash rate jumping by 4 per cent, repayments on an average home loan of $585,000 are now an extra $1,415 every month.

The number of home and personal loans in arrears rose, but still remains low, with the bank’s chief executive Matt Comyn stating arrears and impairments remained below long-term averages.

Camera IconThe bank’s profits have been propped up by higher interest rates. NCA NewsWire / John Gass Credit: News Corp Australia

However, the bank also revealed new analysis which showed how rate hikes and high inflation were being felt disproportionately by younger Australians. While customers under 34 have seen their savings fall over the 12 months to June 2023, customers 35 and above have seen their savings grow.

The bank largely attributed the profit result to an increase in net-interest margins (NIMs), the amount of interest that a bank receives on a loan after it pays its customers interest, which jumped 0.17 percentage points in the year to June.

The result eclipsed the bank’s previous record in 2017 when it posted a $9.88bn cash profit.

However, NIMs fell slightly from a peak of 2.10 per cent in late 2022 to 2.05 per cent in the first half of 2023 as the bank reduced rates to compete in the lucrative home loan market.

Camera IconCommonwealth Bank has posted a record cash profit of $10.16 billion. NCA NewsWire / Glenn Campbell Credit: NCA NewsWire

“Margins increased year-on-year due to the rising interest rate environment, partly offset by the impact of increased competition, particularly in home lending,” the bank said.

At the same time, loan impairment expenses for bad debts rose to nearly $1.5bn, caused by “ongoing cost of living pressures and rising interest rates”, also weighing on the bank’s profitability.

With cost-of-living pressures showing little sign of easing, forecasters expect NIMs to tighten even further, further crimping the bank’s profits.

The result eclipsed the bank’s previous record in 2017 when it posted a $9.88bn cash profit.

“The Australian economy has been resilient with the tailwinds of a recovery in population growth, relatively high commodity prices and low unemployment,” Mr Comyn said in a statement accompanying the profit result.

Camera IconDespite the record profit result, loan impairment expenses and competition in the home loan market has seen CBA’s margins slide. NCA NewsWire / Damian Shaw Credit: News Corp Australia

“However, there are signs of downside risks building as rising interest rates have a lagged impact on mortgage customers and other cost of living pressures become a financial strain for more Australians.”

“We are seeing consumer demand moderate and economic growth slow, and we are closely monitoring the impact of reduced discretionary spend, particularly on our small and medium-sized business customers.”

The profit result was largely in line with forecasters’ expectations, who estimated that the bank would announce cash earnings of $10.1bn according to Citi analysts.

Despite the more challenging economic conditions, CBA will pay a dividend of $2.40 per share, bringing final dividends to $4.50. Chief executive Matt Comyn also announced a share buyback worth up to $1 billion in the 2024 financial year.

More to come.