Commonwealth Bank of Australia (CBA) has exceeded all expectations with a record annual cash profit of $7.8 billion, and will reward its shareholders by paying higher dividends.
A 10 per cent rise in cash profit was primarily driven by strong earnings growth in its core retail banking operations, which are the largest of any Australian bank.
Analysts had expected CBA to make a cash profit of around $7.6 billion.
CBA's net profit, which includes one-off and non-cash financial items, was $7.7 billion in the year to June 30, up eight per cent from the previous year.
"This is an impressive performance all-round," Morningstar analyst David Ellis said.
"Importantly, we remain confident the bank's low risk, conservative business settings will produce further earnings and dividend growth despite generally limp economic conditions."
CBA shareholders will be paid a fully-franked final dividend of $2 per share, taking full year dividends for 2012/13 to $3.64.
That's up from a final dividend of $1.97 in 2011/12, and a full year payout of $3.34.
But the bank's shares fell on Wednesday, after reaching an all-time high on Tuesday.
They were down 94 cents, or 1.3 per cent, at $73.61 at 1132 AEST.
Chief executive Ian Narev said a focus on improving the bank's productivity and customer service had contributed to a strong financial performance, despite challenging economic conditions.
"Our primary areas of economic focus are the level of confidence of Australian business and households, the impact of economic conditions in China on the demand and price for resources, the value of the Australian dollar and the resultant impact on export-sensitive parts of the Australian economy and the stability of funding markets," he said.
"Indicators relating to all of these factors have been mixed over the past six months, and we expect that to remain the case in the near term.
"We believe that the underlying conditions for our business in the 2014 financial year will be similar to those we have experienced in the recently completed year."
