...with CBA trading at close to 27x annualised cash profits, the question is whether it can remain attractive at this point of the economic cycle.
...you know my answer to that. CBA quarterly profit up 6pc to $2.6b on business lending surge James EyersSenior Reporter
Updated May 14, 2025 – 8.13am,first published at 7.57am
Commonwealth Bank’s cash profit rose 6 per cent in the March quarter to $2.6 billion, underpinned by strong growth in lending to Australian businesses.
Business loans surged 9.1 per cent, or $3.7 billion, in the three months to the end of March compared to the quarter before, or 1.3 times the banking system’s average. CBA pointed to “diversified growth across sectors”.
Business lending was higher than both home lending and deposits, which grew just below the system average.
Cash profit for the bank’s third quarter was flat on the quarterly average for the first half but came in just ahead of consensus expectations, while loan losses ticked higher.
CBA said its net interest margin was stable. Operating income was up 1 per cent, driven by lending volume growth and higher trading income, while operating expenses were 1 per cent higher, driven by more investment in technology and staff.
The bank said collective and individual provisions for bad debts were “slightly higher” and that it booked a loan impairment expense of $223 million.
“Portfolio credit quality has remained sound, with increases in consumer arrears and corporate troublesome and non-performing exposures,” the bank said.
A company chart released to the ASX shows corporate non-performing loans rising from $2.8 billion a year ago to $3 billion at the end of March, while “troublesome” corporate loans rose from $3.1 billion a year ago to $3.6 billion at the end of March.
Meanwhile, customers more than 90 days late on home loan repayments rose from 0.44 per cent two years ago to 0.71 per cent, which is higher than the historical average of 0.65 per cent.
Chief executive Matt Comyn said in a statement that heightened risk to the global economy from geopolitical and macroeconomic uncertainty could slow the domestic economy, but that the outlook was on the whole positive.
“Australia is in a relatively strong position to navigate the challenges,” he said. “Australia remains an attractive place to live and work. Government investment in infrastructure and services is helping to support employment and growth, and underlying inflation is moderating.”
CBA’s quarterly update comes after its shares shed 0.6 per cent to $166.14 on Tuesday, but its stock price remains elevated since touching a record high earlier this month.
Analysts are concerned about CBA’s extreme valuation and potential for margin pressures to emerge.
“While there is little debate around CBA’s execution, the strength of its deposit franchise and its technology, its valuation remains a bridge too far in our view,” Citi said in a preview of the result.
