Dark warning in CBA’s 9 billion profit reveal

Australia’s biggest bank says the rising cost of living is pushing up mortgage arrears as it posts a $9.48bn profit.

Commonwealth Bank’s eyewatering profit is a 6 per cent slip on last year.

Full-year dividends for shareholders in Australia’s largest company have risen 15c to $4.65, fully franked; This represents 79 per cent of its profits.

The bank released its full-year results on Wednesday morning, flagging that higher cost of living is increasing home loan arrears.

Arrears in expired fixed rate home loans have jumped noticeably, up from 0.92 per cent to 1.3 per cent, though below the 15-year average of 1.38 per cent.

Home loans in 90-plus days of arrears have jumped from 0.47 per cent to 0.65 per cent, though sit level-par with the historical average, and a tick below 2019 levels.

The majority of home loan borrowers remain ahead of scheduled repayments, the bank said.

Personal loans in arrears of more than 90 days have climbed to 1.5 per cent, above the 1.25 per cent average for the past 15 years.

While home and personal loan arrears sit close to or above 15-year averages, credit cards in 90-plus days of arrears dipped slightly to 0.74 per cent, below the 0.94 per cent historical average.

The bank had made it easier to access hardship assistance, chief executive Matt Comyn said.

Higher interest rates are slowing the economy and “gradually moderating inflation”, Mr Comyn said.

“The Australian economy remains resilient with low unemployment, continued private and public investment, and exports supporting national income.

“Australia remains well positioned but downside risks continue around productivity, housing affordability, as well as ongoing global uncertainty,” Mr Comyn said.

“We will play our part in stimulating economic growth by lending to productive parts of the economy.”

CBA’s earnings results are widely seen as a bellwether for the Australian economy.

The CBA group holds about one-quarter of Australian home loans, and just over 22 per cent of business deposits.

Flat operating income, a 4 per cent rise in operating expenses and a $306m decrease in loan impairment expenses led to the bank’s dip from its record-high profit last year.

More to come