The Commonwealth Bank of Australia (ASX: CBA) share price will be worth watching closely on Wednesday.

That's because Australia's largest bank has just released its half year results.

Let's see how the big four bank performed during the six months.

CBA share price on watch on results day

• Operating income up 3% to $14.1 billion
• Operating expenses up 6% to $6.37 billion
• Pre-provision profit up 1% to $7.73 billion
• Cash net profit after tax up 2% to $5.13 billion
• Cash earnings per share up 2.3% to 307 cents
• Fully franked interim dividend up 5% to $2.25 per share

What happened during the half?

For the six months ended 31 December, CBA reported a 3% increase in operating income to $14.1 billion.

This reflects volume growth in its core businesses and a small increase in the bank's net interest margin (NIM) to 2.08% after the effects of competitive pressure on deposits and lending pricing were offset by higher earnings on capital hedges and the replicating portfolio.

Operating expenses increased 6% over the prior corresponding period. This was mainly driven by higher staff expenses due to inflation and two additional working days, and additional investment to accelerate the refresh of its technology infrastructure and to further enhance its generative AI capabilities and data infrastructure.

Nevertheless, the bank still recorded a 1% increase in pre-provision profit to $7.73 billion, a 2% lift in cash net profit after tax to $5.13 billion, and a 2.3% rise in cash earnings per share to 307 cents. The latter is ahead of the consensus estimate of 291 cents per share, which could bode well for the CBA share price on Wednesday.

Finally, the bank's board declared a fully franked interim dividend of $2.25 per share, which represents a 5% increase on the prior corresponding period.

Management notes that this represents a half year payout ratio of ~75% on a normalised basis, which reflects its aim to pay strong and sustainable fully franked dividends. It continues to target a full year payout ratio of 70% to 80% of cash net profit after tax.

Management commentary

CBA's CEO, Matt Comyn, was pleased with the results. He said:

Through supporting our customers and investing in our franchise, we have been able to deliver solid results for our shareholders, despite the weaker economic backdrop. Our consistent financial performance demonstrates our disciplined operational and strategic execution, and the bank's deep customer relationships that help us understand needs and risks and deliver superior digital experiences.

Comyn was cautiously optimistic about the remainder of FY 2025. He adds:

The Australian economy has slowed considerably, with cost of living pressures continuing to weigh on consumer demand and younger customers in particular making real sacrifices. Private sector growth is weak, immigration is starting to slow and geopolitical uncertainties remain.

However underlying inflation is now moderating towards the target range and we expect Australia will follow offshore economies with an easing cycle starting in 2025. This should provide some relief to many households and improve business confidence. The strong labour market and level of ongoing public sector infrastructure spend also provide cause for optimism on the domestic economic outlook.

The CBA share price is up 40% over the past 12 months.