Commonwealth Bank’s (CBA) September quarter trading update reflects ‘business as usual’ trends, according to Jarden analyst Matthew Wilson. The update shows net interest income (NII) increased by 3 per cent quarter-on-quarter and 5 per cent year-on-year. Commonwealth Bank is one of Australia’s largest financial institutions, providing a range of banking and financial services to individuals and businesses. The bank’s services include retail, business and institutional banking, funds management, superannuation, insurance and investment services.
However, Wilson noted that the headline net interest margin (NIM) experienced a decline. This decrease was attributed to growth in lower-yielding assets, an increase in deposit switching by customers seeking higher rates, and persistent competitive pressures within the financial sector. Loan volumes saw a decrease of 4 per cent compared to the previous quarter but increased 7 per cent year-on-year. Household deposits grew at 1.2 times the system rate, indicating strong customer retention. Other income saw a modest increase of 1 per cent quarter-on-quarter. Operating expenses decreased by 1 per cent, excluding restructuring costs and other notable items.
CBA reported an unaudited cash profit of $2.6 billion for the quarter. The bank’s CET1 (Common Equity Tier 1) capital ratio stood at 11.8 per cent, supported by organic capital generation. Impaired loans remained stable at 0.94 per cent, indicating a healthy loan portfolio.
Looking ahead, Wilson highlighted that the financial sector faces high valuations and ongoing competition. CBA’s performance is considered largely steady amidst these challenges. Additionally, comments made at the annual meeting and the emergence of new payment technologies suggest that the transition to a new chief executive officer may take longer than initially anticipated.
