Australia’s Commonwealth Bank has announced a $6 billion share buyback and dividend hike following a jump in profits

The banking giant’s profits rose by a fifth from last year’s pandemic-affected levels.

CommBank on Wednesday delivered full-year cash profits of $8.65 billion – that’s a a 20 per cent annual increase.

Australia’s biggest bank has become latest financial firm to return some of its excess capital to shareholders.

CBA will launch a $6 billion share buyback, saying it was well-placed to support customers while returning excess capital.

In a sign of the board’s relative optimism on the economy, it lifted the final dividend to $2, up from 98c last year, at a time when dividends were capped by the regulator due to coronavirus pandemic.

Australia’s banking giants reveal similar news

Competing banking firms, National Australia Bank (NAB) and ANZ Bank have also unveiled share buybacks in recent weeks.

Lenders are right now holding billions of dollars more in capital than required by regulators, following asset sales and last year’s moves to retain earnings.

The Commonwealth Bank’s profits were driven sharply higher by a $554 million fall in its charges for impaired loans – a benefit that goes straight to the bottom line.