Commonwealth Bank of Australia (ASX: CBA) shares are currently in the red by 0.3% following the ASX bank share’s announcement regarding expenses that are going to be included in the upcoming FY23 result.
CBA is due to release its full-year result on 9 August, which will tell investors about a number of elements of the company’s performance over the 12 months to 30 June 2023.
The reported net profit after tax (NPAT) figure is going to take a $212 million hit.
Notable items
Sometimes a business will report notable, significant or one-off items in the result.
Why are some expenses separated like that? It’s so that the business can more easily tell investors about the underlying performance of the business, which management would argue more accurately reflects how the company is going.
Of course, these are actual costs and shareholders have lost out on those dollars.
CBA revealed that in the half-year to 30 June 2023, it’s recognising $212 million of pre-tax provision across two items.
First, costs associated with Bankwest, including the transition of business banking to CBA and changes in the group’s operating model.
The second part of the $212 million relates to costs regarding a one-off levy for the compensation scheme of last resort after approval by the Australian Parliament in June 2023.
The ASX bank share explained that in order to provide a “transparent view” of its performance, CBA will exclude these items from the underlying operating expenses. To enable investors to judge the result, CBA will present operating expenses both on an underlying and headline basis.
What else could CBA shares report?
I’d guess that not many people know the final figures within CBA’s report at this stage – perhaps a few leadership figures and accountants have seen the numbers.
Analysts have had a go at estimating what the business might report.
There are a number of things for investors to think about in this result – the net interest margin (NIM), loan arrears, credit provisions and the outlook commentary. Interest rates have soared over the past year or so, which could impact all of these areas of the report.
Commsec estimates currently suggest that CBA could report earnings per share (EPS) of $5.97. That would put the bank valuation at more than 17 times FY23’s estimated earnings.
Are analysts feeling positive about the company?
There is a lot of negativity about the CBA share price at the moment.
Commsec collates analyst opinions about companies. At the moment there are no analysts that think the CBA share price is a buy. Three think it’s a hold and twelve believe it’s a sell.
Time will tell whether negativity is the right belief for CBA’s valuation and result.
