Commonwealth Bank of Australia (CBA) has reported a record interim cash profit of $4.91bn for the six months to 31 December last year, beating median analysts' estimate of $4.81bn cash earnings.
“Strong” growth in home lending, “solid” corporate lending, and a growth in deposits helped the bank’s operating income grow 6.1% to $13.1bn, the bank said on Wednesday.
The record interim cash profit marked a 2% gain for the same period during the previous financial year. “We have invested carefully but consistently over many years, leading to ongoing revenue and balance sheet growth, and continuous innovation for our customers,” said CEO Ian Narev
. “At the same time, our emphasis on productivity has ensured that expense growth is fit for the times.”
Higher funding costs resulted in 4 basis-point drop in the group’s net interest margin to 2.11%. CBA also announced that interest-only investor loans will go up by 0.12% on April 3. Customers who have taken out a line of credit against their home face a 0.04% mortgage interest rate hike
Home loan arrears continued at low levels, despite higher arrears in Western Australia, the bank said. During the second half of last year, the bank provided 140,000 new home loans – including 15,000 for first home buyers.
The bank has a 25.4% market share in home loans, helping to drive profitability but making it the most vulnerable of Australia's “Big Four” banks to any downturn in the housing market, Reuters
CBA expects house prices to rise by 5% across the country this year.
“[T]he risk of market volatility, and indeed economic shock, remains heightened,” Narev said. He attributed this to “the combination of geopolitical volatility and weak economic recovery in parts of the world.” But he added that the Australian economy has seen more positive trends recently.
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