One of Australian biggest bank, Commonwealth Bank commonly called CommBank Chief Executive Officer, Matt Comyn has received mouth watering whopping $10.4 million in total compensation for the fiscal year ending in June, including nearly $8 million in bonuses. This eye-popping pay package translates to a remuneration that is 110 times greater than that of an average worker.
On Wednesday, the nation’s largest bank announced its largest ever cash profit of $10.2 billion in 2022-23, with the 6 per cent increase driven by expanding profit margins after soaring interest rates pushed the bank to hike variable mortgage repayments 10 times in that period.
CommBank Record breaking cash profit of $10.16 billion
This revelation surfaces as Australia’s largest retail bank, CommBank, disclosed a record-breaking cash profit of $10.16 billion, despite cautioning about mounting pressures faced by its customers.
The bank’s 2022-23 performance showcased a 6% increase, primarily fueled by expanded profit margins resulting from soaring interest rates, which led the bank to hike variable mortgage repayments on ten occasions during the period.
Mr Comyn received a whopping $10.4 million salary package and allowances, which included nearly $8 million in bonuses. “According to The Australian Financial Review your take-home pay increased by almost 50 per cent,” one staff member wrote in an online town hall question, shared on Instagram by The Aussie Corporate account.
“Why are you entitled to this large increase while the rest of us get short-changed to a maximum of 5.25 per cent?”
Users on social media also expressed outrage. “So the CBA has recorded record profits and giving the bosses huge bonuses,” one man wrote.
“Maybe the best thing that could happen tomorrow is every one walk into their nearest greedy CBA branch, close their account and withdraw their money. Nothing but pure greed deserves nothing less than closure due to lack of funds.”
Another described it as “totally obscene that the head of CBA earned $10.4 million last year and their exec level all earned bonuses while so many of their clients are going through serious hardship.
“These folk are employees! They haven’t risked a cent of their money for these windfall remunerations while SMEs all around the country are struggling, in a large part, because of their bank charges,” he said.
“A lot of these small businesses risk absolutely everything to try and get ahead but because of inflation not meeting government thresholds, because of war, global and local Covid recovery and many things out of the individual’s control, the banks somehow get licence to rip into the non-elite population.”
Over the past year, Australian households have been grappling with a dozen interest rate hikes, causing financial strain. With the cash rate surging by 4%, homeowners now contend with an additional $1,415 per month in repayments on an average home loan of $585,000.
Although the number of delinquent home and personal loans has risen, it still remains relatively low. CEO Matt Comyn emphasized that arrears and impairments continue to stay below long-term averages.
Interestingly, the bank’s analysis revealed a generational disparity, with younger Australians experiencing a decline in savings over the year ending in June 2023, while those aged 35 and above witnessed growth in their savings.
The bank attributed much of its profit surge to an uptick in net-interest margins (NIMs), the interest a bank garners from loans after paying out customer interest. NIMs rose by 0.17 percentage points during the year to June.
While this result surpassed the bank’s previous record profit of $9.88 billion in 2017, NIMs did slightly decrease from a peak of 2.10% in late 2022 to 2.05% in the first half of 2023 due to rate reductions to stay competitive in the home loan market.
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Amidst the backdrop of increasing competition and rising interest rates, the bank’s loan impairment expenses for bad debts swelled to nearly $1.5 billion, attributed to ongoing cost-of-living pressures.
As cost-of-living challenges persist, analysts predict further tightening of NIMs, which could put a strain on the bank’s profitability.
Despite the challenging economic landscape, Commonwealth Bank plans to distribute a dividend of $2.40 per share, bringing the final dividends to $4.50. Moreover, CEO Matt Comyn announced a share buyback worth up to $1 billion in the 2024 fiscal year.
