The Commonwealth Bank of Australia (CBA) announced a 6% increase in its third-quarter cash earnings on Wednesday, fueled by higher lending volumes and improved trading income. The country’s largest bank reported a cash net profit after tax of approximately A$2.6 billion ($1.68 billion) for the three months ending March 31.
CBA’s interest income saw a modest rise of 1% during the quarter. The bank experienced a 4.1% increase in home lending volume, while business lending grew by 9.1% compared to December 2024 levels. Despite the growth, CBA said its net interest margin for the quarter remained stable, excluding non-recurring earnings. However, the bank did not disclose a specific figure for this key profitability measure in its trading update.
Analysts from Citi noted that CBA’s core earnings surpassed expectations, and its margins performed better than those of its competitors. Last week, the other three banks in Australia’s “Big Four” – National Australia Bank (NAB), Westpac, and ANZ – reported mixed first-half results, with ANZ seeing stable margins, while the others faced contraction due to heightened competition in the mortgage market.
CBA CEO Matt Comyn acknowledged the challenges faced by Australian households and businesses due to cost-of-living pressures, stating, “It has been another challenging period for many Australian households and businesses.” He also mentioned that in February, the Reserve Bank of Australia implemented its first interest rate cut since November 2020, with markets anticipating another 25-basis-point reduction next week.
As the dominant player in Australia’s A$2.2 trillion mortgage market, CBA is more exposed to potential risks if deposit spreads return to more normal levels as interest rates decline. Nevertheless, Comyn expressed confidence in Australia’s strong economic fundamentals, which he believes will help the country weather global uncertainties. He stated, “There is heightened risk to the global economy from geopolitical and macroeconomic uncertainty, which could slow the domestic economy. Australia is in a relatively strong position to navigate the challenges.”
Shares of CBA rose by 0.6% to A$167.12 at 0110 GMT, nearing their record high from earlier this month, while the broader market fell 0.2%. Citi analysts suggested that, despite the limited disclosure in the trading update, the bank’s earnings outlook may remain stable in the short term, providing continued support to its stock.
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