Australia’s biggest bank has increased its quarterly earnings even as home loan applications fell, with high inflation and interest rates continuing to weigh on the wallets of households and businesses.
Commonwealth Bank of Australia generated a bottom-line first-quarter net profit of $2.8 billion, up eight per cent on the previous corresponding period.
But home loan arrears of 90 days or more rose by seven basis points to 0.8 per cent during the three months ended September 30, reflecting cost-of-living pressures.
Personal loan arrears improved to 1.66 per cent, although there was still evidence of ongoing pressures, while credit card arrears were flat at 0.73 per cent.
“We remain committed to supporting our customers as they manage cost-of-living pressures,” chief executive Matt Comyn said on Wednesday.
“Higher inflation and interest rates continue to place uneven pressure on household incomes and business activity.”
Commonwealth Bank is the nation’s biggest home loan lender, with about a 25 per cent market share and around 1.9 million accounts.
But the bank is still seeing increased caution amongst potential buyers after federal government changes to housing-related tax arrangements in the May budget, with home loan application numbers down by 16 per cent in the quarter.
“While economic growth is slowing, the Australian economy remains resilient, supported by low unemployment and a strong public infrastructure and private investment pipeline,” Mr Comyn said in a statement.
During the quarter, the bank booked a loan impairment expense of $300 million linked to troublesome debts.
Its collective provisions – the buffer used to offset future loan losses – increased by $105 million in the quarter.
“Credit quality remains sound and collective provision coverage as a percentage of credit risk weighted assets remains strong at 1.35 per cent,” the bank said.
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