Commonwealth Bank (ASX: CBA) has reported its full-year results for FY20. We take a look at the company's headline figures, key commentary and guidance outlook, plus review the share market's reaction across the trading day

Headline result

Commonwealth Bank has this morning reported an 11.3% fall in cash NPAT to $7.3 billion. On a statutory basis, NPAT increased 12.4% on FY19 to $9.6 billion.Loan impairment expenses more than doubled to $2.5 billion on account of the economic impact from COVID-19, while net interest margins eased 2 basis points to 2.07%.CBA will pay shareholders a final dividend of $0.98 per share, fully franked, which brings total dividends over FY20 to $2.98, down 31% on the prior reporting period. Shares will trade ex-dividend on Wednesday, August 19.

CBA shares started the trading session brightly, jumping more than 2%, however, ended lower by 0.5% as capital moved into the other banks instead.

Key commentary

Underscoring the difference between statutory and cash NPAT results, divestments, namely the bank's sale of its wealth management business, helped boost statutory results. However, CBA was hit by higher loan impairment expenses as a result of COVID-19. The bank's loan loss rate increased to 33 basis points as a result of a $1.5 billion COVID provision. This rate, while slightly more than double last year's result, is well below that seen in FY09, where it spiked to 73 basis points, and also below FY10, which came in at 41 basis points. Total provision coverage rose from 1.29% in FY19 to 1.7% as at the end of FY20.In terms of COVID-19 related loan deferrals, the company has noted that there has been a drop from recent peak figures. Nonetheless, 135,000 home loans remain in deferral as at the end of July, while 59,000 business loans are in deferral, which are 8% ($48 billion) and 15% ($14 billion) of total accounts respectively. At their peak, deferral figures were trending at 154,000 and 86,000 respectively, with CBA pointing out that these have been declining in recent months.The reduction in interest rates over the year weighed on CBA's net interest margin (NIM), which came in 2 basis points lower at 2.07%. The second-half of the year weighed on the result, where NIM declined 7 basis points half-on-half. There was some reprieve, however, by virtue of lower short-term funding costs for the nation's largest bank, and growth in home lending and deposits. Core business recorded modest growth across the year, with home lending rising 1.3x system, household deposits climbing 9.8% and even business lending recording 5% growth. These factors contributed to an increase in operating income of 0.8% to $23.8 billion.CBA has managed to improve its Common Equity Tier 1 (CET1) capital ratio, with the metric rising from 10.7% to 11.6% at EOFY. This is well in excess of APRA's 'unquestionably strong' benchmark of 10.5%.Last but not least, CBA's final dividend of $0.98 reflects a payout ratio of 49.95% of second half statutory earnings, in line with APRA's past guidance and also reflecting the company's cautious outlook to managing its balance sheet amid economic uncertainty.

Guidance outlook

In providing its outlook, CBA has noted significant uncertainty and strain in the broader economy, but has pointed to stimulus efforts providing support that it anticipates will continue in a targeted form, with monetary policy also likely to remain accommodative for some time yet. It has also flagged a somewhat positive view on the pipeline of infrastructure, mining and agriculture activity, and a positive view on Australia's long-term growth prospects.Management believe lower credit growth and low interest rates will weigh on revenue, requiring the bank to focus on driving efficiencies elsewhere. Nonetheless, the company has pointed towards its "strong balance sheet and capital position", while also taking some confidence in the strength of its operational performance thus far.