Half-year results show home loan arrears have fallen to 0.43%
CBA has declared a half-year cash net profit after tax of $5.15 billion, up 9% on the first half of 2022, ending June 30.
In its half-year results for the six months ended December 31 released on Wednesday, CBA said the increase in cash profit was supported by growth in operating revenue, which it said was partially offset by higher operating costs and higher loan impairment expense.
Statutory net profit after tax was $5.21bn, up 10% on the first half of 2022. Net interest margin was 2.10%, up 18 basis points on the first half.
Loan impairment expense was $511m, an increase of $586m on the prior comparative period (same time last year). Operating expenses were $5.77bn, up 5%, and net interest income was $11.6bn, up 19%.
CBA’s home loan portfolio was $483bn in December 2022 ($570bn including Bankwest), up from $472bn in June. The percentage on variable rates was 65% (includes Unloan), with 71% owner-occupier loans and 28% on investment loans. The percentage of line of credit loans stood at 1%.
Over the six months to December, the bank's home lending portfolio grew by 2.6% (5.3% over the 12 months to December 2022). System growth was 2.5% and 6.4% respectively.
Home loan (90+ day) arrears decreased by six basis points on the first half-year, to 0.43%. Credit card and personal loan arrears were down sxi basis points and seven basis points respectively, to 0.46% and 0.95% – CBA said this was supported by a strong labour market.
CBA CEO Matt Comyn (pictured above) said the bank’s strategic focus on “building tomorrow’s banking today” for customers was illustrated by its leading outcomes on customer advocacy scores.
“We continue to invest in technology and our core businesses to improve customers’ lived experience and to solve their unmet needs. This focus is a key driver of growth in our core deposit and lending volumes to retail and business customers,” Comyn said.
Comyn acknowledged that consumer arrears remained low, while troublesome and impaired assets decreased by $0.5bn to $6.3bn. Loan impairment expenses of $511m reflected ongoing inflationary pressures, rising interest rates, supply chain disruptions and the decline in house prices, he said.
CBA half-year results snapshot (to December 31, 2022)
- Net profit after tax: $5.15bn (up 9% year-on-year)
- Operating income: $13.59bn (up 12% on first half)
- Net interest margin: 2.10% (up 18 basis points)
- Operating expenses: $5.77bn, up 5%
- Loan impairment expense: $511m
- Funding costs: increased margin by 25 basis points, driven by higher earnings on deposits, partially offset by higher wholesale funding costs
- Shareholder interim dividend: $2.10 per share (fully franked)
Average home loan balances up $12bn
Home loan average balances increased $12bn (2%) on the first half-year, which CBA said in the results reflected slower system growth in a highly competitive market.
Business and corporate loans up $17bn
Average balances for business and corporate loans were up $17bn (7%) on the first half-year, driven by growth in business banking lending across a number of industries, CBA said.
The bank said it had also seen institutional lending balances increase, which it said was mainly across corporate lending, structured lending and pooled facilities.
Fixed rate rollovers
The presentation and investor discussion pack accompanying the results showed $42bn of the bank’s home loan portfolio was due to roll off fixed rates in the six months to June this year, with $54bn to roll off in the second half of 2023.
A further $55bn of CBA loans would roll off fixed rates in 2024, $31bn in 2025 and $6bn in 2026, with a further $1bn to roll off in the six months to June 2027.
CBA said approximately 83% of its book would be exposed to rate increases by 2023.
Referring to the current economic climate, Comyn acknowledged that many households were feeling significant strain from rising interest rates, rising electricity costs, groceries and other household items.
Despite this, Comyn said consumer spend remained resilient, with signs of spend slowing in pockets. The fundamentals of the economy remained solid, with low unemployment, strong exports, and returning migration, he said.
“Supporting our customers through rising rates and higher cost of living remains a priority and aligns with our purpose to build a brighter future for all,” Comyn said. “We are providing personalised support, flexibility and financial assistance for our customers who need it.”
