Commonwealth Bank of Australia's $10 billion bumper profit will be welcomed by investors and demonised by the wider community, even though many of its critics own shares in the company.
That is the contradiction of the country's most hated company at the moment. Chief executive Ian Narev has delivered a better-than-expected annual profit, which is evidence he has been able to manage the multi-pronged challenge of increased capital requirements, investor loan crackdown and increased competition in between the endless trips to Canberra to explain himself to politicians.
The latest scandal engulfing the bank in relation to money laundering allegations will overshadow Wednesday's 4.6 per cent lift in annual cash profit.
But if you look at the bank as the market looks at most other companies, from a financial perspective, then CBA is doing well even if growth is not what it used to be after a decade of double-digit profit increases.
Three things stood out in the bank's full-year profit announcement, which comes a day after chairman Catherine Livingstone cut Narev and his management team's short term bonuses.
The $9.88 billion profit itself, which beat the market's expectations, as the bank cemented its position as the nation's biggest home lender despite the regulatory crackdown on investor lending.
CBA also confirmed it was in talks to sell its life insurance business in Australia and New Zealand, which could fetch as much as $5 billion.
While the lawyers will prevent Narev from commenting on the money laundering claims at Wednesday's results presentation, CBA did confirm it will argue it should only be liable for a single $18 million fine in relation to the 53,000 suspicious transactions outlined in the AUSTRAC statement of claim.
It is still up to a court to determine that but it is highly unlikely the bank would be fined per transaction, a move which would sink the company.
The bank's annual profits are now high enough for the politicians to round up to $10 billion which will make for some negative headlines on Wednesday in the context of the money laundering issue.
However, it is higher than the $9.8 billion analysts had expected. The second-half performance was also strong, with a 5 per cent rise in cash profit to $4.97 billion. This period was when the mortgage repricing kicked in off the back of the banking regulator's crackdown on investor home loans.
Earnings per share of $5.74 were also higher than the $5.60 flagged by analysts. Importantly for the retail shareholders, which make up more than half of the bank's shareholders, the final dividend rose to $4.29 from $4.20 a year ago.
The closely-watched net interest margin fell 3 basis points to 2.11 per cent. This is not great but was expected as higher funding costs and growing competition for home lending bites.
The banking regulator's crackdown on investor loans has enabled the bank to increase interest rates on some loans, which partly cushions the blow. CBA reported positive jaws, which is when income growth is higher than expense growth, for the year.
Narev's comments on the wider economy will not surprise anyone. He notes households are worried about wages and the cost of living and more business investment is needed to fill the gap left by the downturn in mining and construction investment.
The bank's presentation is heavy on the reminders that this is a company which employs a lot of people, has a lot of customers and returns 75 per cent of its profits to more than 800,000 shareholders.
