Home loans up 3.1% but CommBank's overall profit fell
Australia’s largest bank has recorded impressive third-quarter 2024 lending growth in both home loans and business finance despite a challenging market.
However, unaudited cash net profit after tax fell, while operating expenses rose.
Releasing its 3Q24 trading update, covering the three months ended March 31 2024, Commonwealth Bank notched up 3.1% volume growth in home lending, an increase of $4.2 billion on the December 2023 quarter, while business lending was up $2.7bn or 7.3%.
Unaudited cash NPAT dropped 3%, compared to the 1H24 quarterly average, and was 5% lower on the prior comparative quarter. Unaudited stator NPAT was $2.4bn for the quarter.
Operating expenses were up 2% – in its trading update to the ASX, CommBank said this was due to higher amortisation and staff costs partly offset by productivity initiatives.
Losan impairment expense was $191m, slightly higher, but “portfolio credit quality remained sound, with moderate increases in both consumer arrears and corporate troublesome exposures”, CBA said.
CommBank in strong position - CEO Matt Comyn
CBA chief executive officer Matt Comyn (pictured above) said the financial strength of the bank had helped the group to maintain its support for customers as “Australians continue to feel the pressure from the increased cost of living fuelled by higher inflation and elevated interest rates”.
Commenting on CommBank’s trading update on the bank’s website, Comyn said CBA had continued to strengthen its balance sheet to ensure it remained well positioned to help its customers, communities and the economy.
Comyn pointed to a number of highlights:
- mortgage lending growing by $4.2bn (up3.1%) supporting people buying a property or re-financing their home loan;
- an increase of $2.7bn (up 7.3%) in lending to businesses which saw diversified growth across multiple sectors of the economy;
- a rise in the number of transaction accounts to help people access banking services with an increase of 143,000 retail transaction accounts and 25,000 business transaction accounts;
- the payment of $3.6bn dividends, benefiting around 840,000 shareholders and more than 12 million Australians through their superannuation; and
- completing $20bn year to date of in long-term wholesale funding to enable the bank to provide on-going lending support to the economy.
“We have continued to focus on supporting our customers and communities, investing for the future and providing strength and stability for the broader economy, underpinned by consistent and disciplined execution,” Comyn said.
“We know that many Australians are feeling under pressure due to a higher cost of living and we are here to support those customers that need our help.”
Comyn also said the fundamentals of the economy remained sound. “Unemployment remains low, supported by business and government investment and elevated terms of trade.”
“Immigration is providing a structural tailwind for the economy. We will continue to invest in our franchise to deliver a strong, safe and resilient bank into the future.”
Further key CBA results
CommBank’s 3Q24 results also revealed operating income was 1% lower driven by one less day in the quarter, with lending volume growth offset by slightly lower margins and lower income from minority investments and markets.
Business lending grew above system while household deposits grew by $5.3bn to $390bn, which was just below system, and the increase in home loans equated to 0.7 times system growth.
Operating performance fell 3% on the first-half 2024 quarterly average (5% on the comparative period 12 months ago) as income decreased 1% and operating expenses rose 2%.
On a credit quality basis, the bank further increased its peer leading provision coverage to 1.66%, while from a capital perspective the Common Equity Tier 1 Ratio (Level 2) came in at 11.9%. That compares to a banking regulator’s minimum requirement of 10.25%, which translates to $7.7 billion of surplus capital.
CBA said during the quarter there was an anticipated increase in consumer arrears and troublesome and impaired assets.
Home loan arrears increased to 0.61% as higher interest rates impacted some borrowers, but credit card arrears rose in line with seasonal trends. Personal loan arrears increased 20 basis points in the quarter.
Troublesome and impaired assets were higher at $8bn, representing 0.56% of total committed exposures.
CommBank said the troublesome and impaired assets as a percentage of total exposures remained well below the historic average.
What do you think of CBA's third-quarter performance, particularly when it comes to home loans and business lending? Comment below
