The Commonwealth Bank of Australia (ASX: CBA) reported its earnings for the 2021 financial year (FY21) last week. Not only did CBA report significant growth and a boosted dividend, but the big bank also announced a $6 billion off-market share buy-back. In response, the market pushed the CBA share price to a new record high.
But how did it compare to its smaller, locally focused competitor, Bendigo and Adelaide Bank Ltd (ASX: BEN)?
While the two banks work in the same sector, their businesses and market capitalisation differ significantly. Therefore, it may be a useful exercise to compare how they performed over FY21.
So, how did the CBA earnings stack up against those of Australia's fifth-largest retail bank? Let's take a look.
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CBA share price soars on FY21 earnings
If you missed CBA's earnings, here are the highlights of the bank's FY21:
- Net profit after tax of around $8.84 billion – 19.7% more than that of FY20
- Approximately $8.65 billion worth of cash earnings, up 19.8%
- Net interest margin down 4 basis points to 2.03%
- Common Equity Tier 1 ratio up 150 basis points to 13.1%
- $2 fully franked final dividend
- Off-market share buy-back which is expected to reduce its share count by around 3.5%
As you can see, FY21 was a successful period for CBA, and its share price reacted positively.
The CBA share price gained 1.5% after the bank released its earnings. Not to mention, it hit a record high of $109.03 during intraday trade.
However, it has since fallen 8.2% to trade at $99.27.
How does this compare to Bendigo Bank's FY21 earnings?
Bendigo Bank released its earnings for the financial year just been slightly after CBA. However, its results weren't received with the warm welcome CBA's were. The Bendigo Bank share price slumped by 9.9% in response to its FY21 earnings.
Here's a sample of what Bendigo Bank reported:
- Statutory net profit after tax of $524.0 million – up 172%
- $457.2 million of cash earnings after tax, 51.5% higher than those of the prior corresponding period
- Net interest margin down 7 basis points to 2.26%
- Common Equity Tier 1 ratio up 32 basis points to 9.57%
- 50-cent fully franked final dividend
As the Motley Fool Australia reported at the time, while Bendigo Bank recorded exceptional growth, its net interest margin and common equity tier ratio likely let it down.
While the CBA earnings also outlined a decreased net interest margin, it was a far lesser drop.
All in all, both banks reported significant growth in profits and earnings, with CBA bringing up the comparative rear.
CBA share price snapshot
Despite the market's enthusiastic reception to the CBA earnings, the bank's shares have since dipped.
Right now, the CBA share price is 18% higher than it was at the start of 2021. It has also gained 42% since this time last year.
