Commonwealth Bank of Australia said it had been a ‘challenging’ first half of the year, from widespread bushfires to the coronavirus pandemic. ©AFP/File William WEST

Sydney (AFP) – Australia’s Commonwealth Bank (CBA) reported an 11.3-percent drop in full-year cash profits Wednesday as it took provisions against loan losses due to the coronavirus crisis.

CBA said its statutory net profit after tax for the year ended June 30 was Aus$9.6 billion (US$6.9 billion), up 12.4 percent from the previous year, mainly due to the sale of some businesses.

The statutory figure had been down 8.1 percent in 2019 and 4 percent the previous year as CBA, Australia’s biggest bank, was weighed down by fines and reimbursements to customers over a raft of financial irregularities and malpractice claims.

But underlying cash net profit, the bank’s preferred measure, was off a sharp 11.3 percent to Aus$7.3 billion, reflecting “the impact of the coronavirus pandemic on our customers and the economy”, it said.

The final dividend of 98 cents was less than half the Aus$2.00 paid out after the bank’s half-year results in February.

“It has been a challenging six months for many Australians, from bushfires at the start of the year, right the way through the pandemic,” said CBA chief executive Matt Comyn.

“We have seen a sharp economic contraction during the course of the year as a result of the pandemic,” he said.

“Not quite as bad as we’d first feared, but certainly the pace of recovery does look like it will be longer.”

The bank increased its provision for loan losses by Aus$1.3 billion to Aus$2.5 billion due to the crisis, Comyn said.

Australia has been more successful than many countries in containing the coronavirus outbreak, with some 22,000 cases and 352 deaths out of a population of 25 million.

But it closed many businesses for months in the first half of the year to counter the spread of the disease, and while much of the country has eased those restrictions, a second outbreak in Victoria state has cast a pall over the recovery.

The economy contracted in the first two quarters of the year in the country’s first recession in nearly three decades.

Comyn said CBA expected GDP to be down about 4 percent overall in 2020 but to rise 2 percent in 2021, with unemployment expected to peak at around 10 percent.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.