Commonwealth Bank profit rises as home loan arrears hit seven-year high

Summarised from 2 outlets · 3 reports · Updated 11 Nov, 01:08 · Archive

Commonwealth Bank's first-quarter profit climbed to $2.8 billion despite home loan applications falling 16 per cent and 90-day mortgage arrears reaching a seven-year high of 0.8 per cent.

Commonwealth Bank of Australia announced a first-quarter cash profit of $2.8 billion, an 8 per cent increase from a year earlier, for the three months to 30 September. The result was driven by strong growth in business lending, which grew around 14 per cent, faster than the overall market. However, home loan applications remained about 16 per cent lower than the prior year, reflecting broader challenges in the housing market.

Mortgage arrears worsened significantly. Ninety-day-plus home loan arrears hit 0.8 per cent of customers, up from 0.64 per cent in September 2019 and the highest level in seven years. Personal loan arrears stood at 1.66 per cent, while credit card arrears were at 0.73 per cent. The bank increased collective provisions by $105 million in the quarter and reported loan impairment expenses of $30 million.

The pressures reflected multiple headwinds. Five interest rate rises this year, with rates at their highest in 18 years, combined with federal budget changes in May to negative gearing and capital gains tax discounts, weakened home sales volumes and reduced prices. Cameron McCormack, senior portfolio manager at VanEck, said the consumer struggle was hitting banks harder as households faced cost-of-living pressures from sticky inflation and energy prices. Chief executive Matt Comyn acknowledged that higher inflation and interest rates continued to place uneven pressure on household incomes and business activity, though he said the Australian economy remained resilient, supported by low unemployment.

How it is being reported

• Mortgage applications plunge 16 per cent as Commonwealth Bank delivers $2.8bn quarterly profitCommonwealth Bank is raking in billions while more Australians fall behind on their mortgages, with home loan arrears climbing.Perth Now · 11 Nov, 00:38
• Mortgage applications plunge 16 per cent as Commonwealth Bank delivers $2.8bn quarterly profitCommonwealth Bank is raking in billions while more Australians fall behind on their mortgages, with home loan arrears climbing.The West Australian · 11 Nov, 00:38
• Commonwealth Bank home loans plunge and 90-day arrears hit seven-year highCommonwealth Bank of Australia’s first-quarter profit climbed as growth in loans to businesses by the country’s largest lender offset struggles in mortgages during the housing slump.The West Australian · 10 Nov, 22:25

In this story: Commonwealth Bank of Australia · Matt Comyn · Australia · VanEck · Cameron McCormack

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