Compared to the March quarter of last year, CBA grew home lending by 8.5 per cent, household deposits by 13.5 per cent, business lending by 12.6 per cent and business deposits by 13.5 per cent.
Nevertheless, total operating income was down 1 per cent to $12.2 billion and net interest income was down 2 per cent.
Mr Comyn said as competition remains intense, the revenue result reflects the housing cycle turning and CBA’s decisions to reduce lending at higher loan-to-value or debt-to-income ratios. But he added the contraction was “mainly price driven”. Banks have also been earning lower margins on fixed rate loans which became popular as the pandemic struck.
CBA said volume growth had been offset by a lower net interest margin, which continued to be influenced by factors it called out in first half result in February, including “home loan margin compression from higher swap rates, portfolio mix effects and price competition”.
Mr Comyn said he expected higher interest rates to alleviate margin pressures later this year.
“Clearly that starts to turn around when we go into a rate hiking cycle which certainly we are in, and we would expect that is going to provide a tailwind to net interest margins, into the first half particularly of our financial year 2023,” Mr Comyn said in an interview.
Expenses were down by 2 per cent, which CBA said was due to more staff taking annual leave.
Credit quality remains strong. The number of home loans more than 90 days overdue fell by a basis point to 0.51 per cent, but overdue credit cards increased by 10 basis points to 0.59 per cent and arrears on personal loans lifted by 4 basis points to 1.01 per cent.
Yet overall impaired assets of $6.6 billion still represent only 0.51 per cent of loans.
“Home loan arrears remained low, influenced by origination quality, low interest rates, a sound property market and balance growth,” CBA said. “Credit card and personal loan arrears began to normalise in the quarter inline with seasonal trends.”
Looking ahead, Mr Comyn said the bank is “well positioned to support business investment to build Australia’s future economy” and CBA had reached record levels of market share in lending to businesses.
“By and large, businesses aren’t particularly sensitive to rates. They are cognisant this is a very low rate environment and can’t continue,” he said.
Business credit growth would be supported by higher prices, and ongoing investment in productive capacity, including logistics and bringing manufacturing onshore. “There is still strong demand and pipelines from our perspective look strong into 30 June,” Mr Comyn said.
— to www.afr.com
