Commonwealth Bank (ASX: CBA) has reported its first-half results for FY21. 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 reported a 20.8% drop in statutory net profits after tax to $4.9 billion, alongside cash net profit after tax that is 10.8% lower than the prior corresponding period, coming in at $3.9 billion.CBA has also returned to a higher dividend for shareholders, declaring an interim dividend of $1.50 per share, fully-franked, albeit less than last year's $2 per share payment. Shares will trade ex-dividend on Tuesday, February 16, with payment to follow on Tuesday, March 30.

Shares in the nation's leading bank opened higher this morning at $88 per share before drifting lower throughout the morning. By the end of the day's trade, CBA was 1.5% lower at $86.12 per share.

Key commentary

Core volume growth saw a rise in activity of $13 billion across home lending, $23.2 billion via household deposits and $4 billion courtesy of business lending, which helped to mitigate a drop in operating income arising from the pandemic and low interest rate environment. In total, operating income for the half was circa $12 billion, comparable with that twelve months prior, and marginally ahead of that generated in 2H FY20.While CBA has benefitted from lower wholesale funding costs in a low rate environment, this has been offset by the impact on deposits and capital earnings, not to mention, higher liquid balances. As a result, the bank's net interest margin deteriorated 10 basis points against the prior corresponding period, or 3 basis points versus last half, to a figure of 2.01%.Lower margins as well as COVID-19 provisioning were the largest drag on net profits, with loan impairment expenses and provisions up $233 million over the last year to $882 million in the most-recent half.

The loan loss rate for the half was 22 basis points, skewed towards corporate loan impairments following forward-looking adjustments associated with weakness in the aviation, entertainment, leisure and tourism industries. Consumer arrears have continued to trend downwards across each lending category.

With the exclusion of COVID-19 impairments and remediation costs, cash net profit after tax was broadly in line with 1H FY20.

Elsewhere, one bright spot was the jump in CBA's Common Equity Tier 1 capital ratio, which compares a bank's equity capital against its risk-weighted assets. At 12.6%, this figure improved by 100 basis points on the preceding half and 90 basis points against the first half of FY20. It remains comfortably above APRA's benchmark of 10.5% to signify an "unquestionably strong" position.The interim dividend payment of $1.50 per share represents a payout ratio of 67%, which is below the bank's target range of between 70-80%. Nonetheless, in the preceding half CBA paid shareholders a final dividend of $0.98 per share, ensuring this upcoming payment is 53% higher.

Guidance outlook

Sounding a somewhat optimistic tone, management has expressed confidence in the Australian economic recovery, albeit careful provisioning mentioned earlier has been adopted as a matter of caution. The bank has embraced more conservative forecasts for GDP growth and the jobs market in 2021 compared with the RBA.

Revenue is expected to remain under pressure in the current low rate environment, however, the company believes its balance sheet and capital position place it well to support its customers.