How is banking titan faring against competition?
The Commonwealth Bank of Australia (CBA) has reported a mixed set of third-quarter results, with year-on-year growth in profits tempered by rising credit stress and stable but pressured net interest margins (NIMs).
Net interest income ticked 1% higher quarter on quarter, driven by “lending volume growth,
higher replicating portfolio and equity hedge returns largely offset by deposit competition and two less days in the quarter”.
CBA said its NIM was “stable” without offering further details, which would put the banking titan ahead of its competition.
While Westpac, NAB, ANZ and Macquarie’s Australian retail segment reported continued growth in lending volumes and deposit inflows last week, they also reported tighter NIMs across the board, signalling an increasingly competitive mortgage landscape.
Where CBA has followed the competition though, is in loan impairment expenses, which rose to $223 million, a 39% increase compared to the average quarterly expense in the first half of the year.
This was driven by a five-basis-point increase in home loan arrears and a 19-basis-point increase in personal loan arrears.
Combined with last week’s bevvy of big bank earnings, it paints a picture of heightened mortgage stress in Australia and sharp competition in the mortgage lending market.
“We know it has been another challenging period for many Australian households and businesses dealing with cost-of-living pressures,” said chief executive Matt Comyn.
“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 these challenges,” he added.
