(Reuters) – Commonwealth Bank of Australia (CBA) reported a 6% rise in third-quarter cash earnings on Wednesday, helped by growth in lending volumes and higher trading income.
Cash net profit after tax for the country’s biggest lender was about A$2.6 billion ($1.68 billion) for the three months ended March 31.
Its interest income rose 1% during the period. Home lending volume in Australia grew 4.1%, while business lending increased 9.1% from December 2024 levels.
The lender also posted a rise in earnings from its replicating portfolio and equity hedges, largely driven by reinvestment at higher swap rates.
CBA said its net interest margin for the quarter was stable, excluding non-recurring earnings. It, however, did not provide a figure for the key profitability gauge in the limited trading update.
The other three of the country’s so-called “Big Four” banks – National Australia Bank, Westpac and ANZ Group – reported mixed first-half results last week but echoed concerns around margin contraction due to an intensely competitive mortgage market.
“It has been another challenging period for many Australian households and businesses dealing with cost of living pressures,” CBA chief executive Matt Comyn said in a statement.
In February, the Reserve Bank of Australia delivered its first interest rate cut since November 2020, and markets are currently pricing in another 25-basis-point reduction from the central bank next week.
CBA controls a quarter of the country’s A$2.2 trillion mortgage market, and therefore faces a bigger risk to earnings than peers if deposit spreads revert to more normal levels as interest rates go down.
CBA also joined its smaller peers in saying that Australia’s strong economic fundamentals will help the country steer through the uncertainty caused by global trade shifts.
“There is heightened risk to the global economy from geopolitical and macroeconomic uncertainty which could slow the domestic economy. Australia is in a relatively strong position to navigate the challenges,” Comyn said.
The bank’s operating costs rose 1% in the third quarter due to increased investment in technology, while consumer arrears and corporate non-performing exposures also jumped.
($1 = 1.5458 Australian dollars)
(Reporting by Himanshi Akhand in Bengaluru; Editing by Shilpi Majumdar and Jamie Freed)
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