One of the most interesting charts in CBA’s profit result yesterday was a comparison of the major banks’ shareholder returns. This shows the total return over 1 year, 3 years, 5 years and 10 years to 30 June 2002. In typical “bank speak”, CBA refers to its competitors as ‘Peer 1’, ‘Peer 2’ and ‘Peer 3’, so I have “decoded” this in the table below.

Total Shareholder Return to 30/6/22

CBA has delivered the best total return over 3 years, 5 years and 10 years. In 21/22, it lost the crown to NAB, but it still comfortably outperformed ANZ and Westpac. Over 10 years, the difference is stark. An investor who put $100 into Westpac 10 years ago has earnt $58 – that’s dividends and capital. If that same $100 had been invested in CBA shares, the investor’s return would have more than trebled to $180.

The table helps to explain the market’s reaction to CBA’s profit result, which saw CBA’s share price ease a touch, and moderate gains for the other banks. The profit result was solid, but not outstanding. And when you are trading at such a big premium, there will be bouts of profit taking and switches into the cheaper banks.

CBA’s full-year cash NPAT of $9.6bn beat forecasts by about $200 million and was up 11% on FY21. However, this was largely due to the writeback of loan impairment expenses booked during the Covid pandemic. Overall loan impairment expenses were -$357 million (they added to profit), and a net improvement of $911 million on FY21.

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