David Craig CBA presentation
About the author:
- Author name:
- By Nick Harris
- Job title:
- Senior Analyst
- Date posted:
- 21 August 2014, 8:35 AM
- Sectors Covered:
- Telecommunications, Technology
We were fortunate to host David Craig, the Chief Financial Officer of Commonwealth Bank, yesterday (20 August) in our morning meeting. Some key points from his presentation were:
- In FY14, CBA posted another record result. CBA continues to improve its Return On Equity despite holding more equity
- For FY14, cash profit increased 12% (to a record A$8.7bn) and the dividend increased by 10% to $4.01 for the year
- David commented that nearly 55% of CBA's register is owned by retail investors. With this in mind CBA runs the business conservatively with the aim of continually growing the fully franked dividend
Outlook for FY15
At their results presentation, CBA commented that the domestic foundations are strong, that confidence remains fragile and that improvements in the economy in FY15 are likely to be gradual.
Investment highlights (Morgans view)
- CBA has been independently ranked #1 for customer satisfaction
- They have the dominant market share in mortgage lending, which is the area where credit is actually growing. Despite expectation for business lending to grow first and fastest, home lending is in fact growing at nearly double the rate of business lending
- The household lending market (system) grew at 6.2% in FY14 (CBA grew theirs ahead of this at 6.7%).
- The business lending market (system) grew at an anemic 3.5% in FY14 (CBA's business lending grew at ~4%)
- CBA's core banking system is years ahead of its peers and, in our view, will be a key part of CBA's ability to continue to differentiate and sell on service rather than price
- Most importantly, CBA has the best return on equity and the lowest earnings volatility in the sector
More information
Morgans clients can access further detailed analysis and commentary on Commonwealth Bank. Alternatively, please contact your nearest Morgans office.
Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.
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