First Impressions Profit Report: Commonwealth Bank of Australia (CBA) - FY15 result in line with consensus, announces capital raising

A positive outcome in our view in line with consensus and consistent with trends in 3Q15. Asset quality stable and that should further allay fears about rising BDD (also further emphasising ANZ had unique issues). Flat “Jaws” comprising 5% income growth and 5% cost growth (BP flat “Jaws” comprising ~6% income growth and ~6% cost growth). Capital Raising: This is a good move by the bank in our view, raising ~$5bn (pro rata renounceable entitlement offer, 1 for 23) priced at $71.50 or 10.5% discount. Fully underwritten and will raise CET1 capital ratio to 10.4%. With this now out of the way, the bank can resume its growth trajectory. Outlook: “On-going focus on long-term strategy to strengthen the franchise in an increasingly competitive environment. Some signs of positive transition in Australian economy: reality ahead of sentiment”. Read our summary (VIEW LINK)