CBA home lending up 7.8%

The major bank has released its quarterly trading update with the latest data on loan volumes, mortgage arrears and net profits

CBA home lending up 7.8%



Home lending at the Commonwealth Bank of Australia (CBA) is on the way up, showing further strong growth for the major bank.

In CBA’s latest quarterly trading update, mortgage volumes increased by 7.8% across the entire group in the 12 months prior to March this year. This was higher than the average system growth of 7% across all ADIs compiled by data from the Reserve Bank of Australia (RBA).

The bank’s volume increases are underpinned by strong performance within CBA’s proprietary channel, the trading update said.

Mortgage arrears are slightly up, increasing from 0.53% to 0.57% between March 2014 and March 2017. Although this growth trended in line with seasonal expectations, arrears continue to be elevated in Western Australia.

In CBA’s home lending portfolio, investment lending decreased as a proportion of total new lending throughout the quarter although the bank failed to give an exact figure. New interest-only lending is now being “closely managed” in line with guidance from regulators such as the Australian Prudential Regulation Authority (APRA).

Bad loans at CBA appear to be dropping as well with the loan impairment expense for the quarter equaling $202m or 0.11% of gross loans and acceptances. This was lower compared to 0.17% found in the first half of the 2017 financial year.

Part of this reduction was due to apartment exposures falling throughout the quarter.

The bank’s unaudited net profit for the quarter sits at approximately $2.6bn while its unaudited cash earnings lie around $2.4bn. This is supported by income growth, cost discipline and credit quality, the trading update said.

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