Commonwealth Bank

PHOTO: CBA made $5 billion despite the pandemic.

Commonwealth Bank reported its profits on Wednesday, and they made a cool $5 billion in the last six months alone.

Revenues were around $12 billion, costs were a bit over $6 billion and they paid $1.6 billion in tax, leaving around $5 billion for shareholders. Not bad going for a pandemic!

The really interesting thing in their financial reports, however, was not the news that banks make completely crazy amounts of profit. We knew that. What was interesting was what they told us about the future.

Commonwealth Bank forecasts what it thinks will happen in the future. It is forecasting an enormous boom in asset prices: house price growth of 8 per cent this year and stock price growth of 12 per cent. It also expects unemployment to fall even as JobKeeper goes away.

This is all just its main scenario, which they call the “central scenario”. There’s also a downside scenario and an upside scenario, as you’d expect.

But they are apparently also quietly bracing for the worst, as the bank revealed it has also produced a “severe downside scenario”. I asked the bank for more details on that and apparently it is too shocking for public consumption because they wouldn’t send it to me.

But even the simple downside scenario makes for shocking reading. In it, unemployment goes up to 10.4 per cent, disposable incomes falls by 3.8 per cent and house prices drop 15 per cent.

Remember, this is not their secret severe downside scenario. This is the one they were happy to release.