CBA’s 5% Profit Rise Backed by $1.2B Tech Investment and Strong Capital

Solid Financial Performance Despite Margin Pressure

Commonwealth Bank of Australia (CBA) has delivered a steady financial performance for the first half of fiscal 2026, posting a 5% increase in net profit after tax to $5.4 billion. This growth was underpinned by lending and deposit volume expansion across its core businesses, even as net interest margins faced downward pressure from heightened competition in home lending and softer Treasury and Markets income.

The bank’s pre-provision profit also rose 5%, reflecting operational resilience. However, these gains were partly offset by a 5% increase in operating expenses, primarily due to inflationary pressures and a strategic ramp-up in technology spending, including a significant investment in generative AI capabilities.

Capital Strength and Shareholder Returns

CBA maintained a robust capital position with a Common Equity Tier 1 (CET1) ratio of 12.3%, comfortably above the regulatory minimum. This strong capital base supports the bank’s capacity to absorb potential losses and fund growth initiatives. Reflecting confidence in its earnings and balance sheet, the bank declared an interim fully franked dividend of $2.35 per share, marking a 4% increase from the prior corresponding period.

Return on equity improved slightly to 13.8%, keeping CBA among the leaders in the Australian banking sector. The dividend payout ratio remains prudent at approximately 74% of cash NPAT on a normalised basis, balancing shareholder returns with reinvestment needs.

Credit Quality and Customer Support

Credit quality showed signs of improvement, with loan impairment expenses declining to $319 million, equivalent to a loan loss rate of 6 basis points. Home loan arrears eased by 7 basis points, aided by lower interest rates and seasonal tax refunds, with 87% of home loan customers now ahead on repayments. The bank continues to hold a strong provisioning buffer of around $2.8 billion above expected losses under its central economic scenario.

Customer support remains a priority, with over 63,000 tailored payment arrangements provided to those in need and assistance extended to more than 79,000 homebuyers, including first-home buyers. CBA also reaffirmed its commitment to regional Australia, maintaining the country’s largest regional branch footprint.

Technology and Security Investments

Technology investment surged 10% to $1.2 billion, focusing on modernising infrastructure and enhancing digital and customer-centric offerings. Notably, CBA is advancing its generative AI capabilities and deploying over 2,900 AI bots to combat fraud, scams, and cyber threats. The bank reported a 95% increase in intelligence shared with the Anti-Scams Intelligence Loop, underscoring its proactive stance on protecting customers and the broader community.

Outlook Amid Economic Challenges

Looking ahead, CBA’s CEO Matt Comyn highlighted strengthening economic growth driven by consumer demand and investment in AI and energy infrastructure. However, supply constraints and persistent inflation above the Reserve Bank’s target band suggest further interest rate rises may be on the horizon. The bank remains optimistic about Australia’s economic prospects and is committed to supporting customers’ financial resilience through these challenges.