:Commonwealth Bank of Australia on Tuesday reported better-than-expected quarterly cash earnings, as higher home and business lending volumes offset the impact on its margins from stiff competition.
Australian banks have been facing headwinds from intensifying competition in the mortgage market as windfall from rising interest rates that boosted their margins over the past year peaks, forcing them to look beyond traditional residential mortgages business for growth.
CBA, the country’s biggest lender, logged a 2 per cent drop in its net interest income impacted by lower net interest margins due to “continued competitive pressure in home loan pricing and customers switching to higher yielding deposits”.
“Competition for home loans has remained intense in Australia and New Zealand,” the bank said.
While CBA’s home lending volumes in Australia jumped A$6.90 billion during the third quarter ended March 31, delays in home loan payments stood at 0.44 per cent, ticking higher from 0.43 per cent in the previous quarter.
“We expect to see further increases in arrears rates as the full effects of interest rate increases are borne by borrowers in the months ahead,” CBA said.
Business lending volumes jumped A$2.60 billion in the reported quarter, while household deposits also rose A$6.2 billion from the prior quarter.
That helped CBA log cash net profit after tax of about A$2.60 billion ($1.76 billion), marginally beating the consensus estimate of A$2.58 billion by Visible Alpha, according to Citi.
It had reported A$2.40 billion in cash net profit after tax a year earlier.
Common equity tier 1 ratio, a closely watched measure of spare cash, stood at 12.1 per cent on March 31, 7 basis points higher than on Dec. 31.
Troubled and impaired assets rose to A$6.70 billion, or 0.47 per cent of the total committed exposures, up from A$6.30 billion as at 2022-end.
($1 = 1.4743 Australian dollars)
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