Commonwealth Bank has reported a quarterly cash net profit of $2.4 billion, down 3 per cent on the first half of financial year 2024, though it believes the economy remains “sound”.
In an ASX announcement on Thursday, the bank said income on a day-weighted basis was flat, with lending volume growth offset by “slightly lower” margins and lower income from minority investments and markets.
Operating expenses were up 2 per cent, with higher amortisation and staff costs partly offset by productivity initiatives.
“We have continued to strengthen our balance sheet to ensure we remain well-positioned to support our customers, communities, and the economy. All Australians benefit from strong and stable banks,” said CBA chief executive Matt Comyn.
“We further strengthened our peer-leading provision coverage and our CET1 capital ratio remains well above the minimum regulatory requirement.
“We have also completed over 90 per cent of our funding task for FY24, having raised $20 billion of long-term wholesale funding to enable us to continue to lend to support the economy.”
Looking at the latest results, CBA’s net interest income was 1 per cent lower with slightly lower net interest margins primarily from continued competitive pressures and customers switching to higher yielding deposits. This was largely offset by higher earnings on replicating portfolio and equity hedges.
It highlighted “improved momentum” in volume growth across home lending and household deposits in the quarter and saw business lending volumes grow above system at 1.1x for the March quarter with diversified growth across multiple sectors.
Over the quarter, there was a loan impairment expense of $191 million. Home loan arrears increased to 0.61 per cent over the quarter as higher interest rates continued to pinch, while credit card arrears and personal loan arrears, too, were attributed to cost-of-living pressures.
“We expect to see further increases in arrears in the months ahead, given continued pressure on real household disposable incomes,” it added.
However, it reiterated balance sheet settings remained “strong” in the quarter, and CEO Comyn highlighted the fundamentals of the Australian economy remain “sound”.
This quarter, the bank paid $3.6 billion in dividends to approximately 840,000 shareholders directly and over 12 million Australians through their superannuation, Comyn added.
Moreover, it completed $250 million of a previously announced $1 billion on-market share buyback.
“Unemployment remains low, supported by business and government investment and elevated terms of trade,” Comyn said.
“We recognise that all households are feeling the impact of higher inflation and higher rates, however immigration is providing a structural tailwind for the economy.”
