Commonwealth Bank reports $11b profit, but warns economy slowing

The Commonwealth Bank of Australia (CBA) on Wednesday reported a record full-year profit of $10.98 billion, but warned economic growth is lagging.

The result marked a 7 per cent profit increase compared with the last financial year and was ahead of market forecasts.

The profit mark was powered by strong home and business lending and healthy credit levels.

Home lending rose 5.8 per cent compared with the past year, while business loans jumped 9.6 per cent.

But the CBA also flagged slowing demand in the housing sector, with home loan applications dipping 15 per cent since the federal budget in May as higher interest rates and a tightening in tax concessions for property investors further cooled the housing market.

A key benchmark of profitability for the bank - the annual net interest margin - dropped 3 per cent ⁠from last year to 2.05 per cent.

Chief executive Matt Comyn said low unemployment and solid investment was helping make the economy durable, but economic growth was being impacted.

“Growth is slowing, with higher interest rates and inflation placing uneven pressure on household incomes and economic activity,” he said.

“However, the economy remains resilient and we should be optimistic about Australia’s long-term potential.

“Housing activity has softened from a high base.”

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The CBA said it grew or was above average in its five core areas – home lending, business lending, consumer finance, household deposits and business deposits – for the first time.

“It is the first time CBA has achieved this and the first time any major Australian bank has done so in the past 15 years,” the bank said.

CBA said it would pay a final dividend of $2.70 per share, fully franked.