Feb 11 (Reuters) – Commonwealth Bank of Australia reported record first-half cash earnings on Wednesday, propped up by robust growth in lending and deposit volumes, although margins were pressured due to tight competition in a low-interest-rate environment.
The country’s largest bank by market value reported a 3.7% increase in home lending volumes, while business lending volumes grew 6.0%, outpacing system growth on both counts. Household deposits rose 7.5%, also beating the system.
These gains helped CBA retain its lead in home lending, maintaining a 25.4% share of the market.
The lender reported a record cash net profit after tax of A$5.45 billion ($3.86 billion) for the six months ended December 31, higher than last year’s A$5.13 billion, and ahead of the Visible Alpha consensus estimate of A$5.19 billion.
It declared an interim dividend of A$2.35 per share, higher than last year’s A$2.25 and beating the Visible Alpha consensus of A$2.31.
However, CBA’s net interest margin, the difference between lending and deposit rates and a key measure of profitability, fell 4 basis points to 2.04%, from a year earlier.
That reflected intensifying competition among lenders to attract borrowers in a low-interest-rate environment during the July-December period, with lower income from its treasury and markets division further crimping margins.
“We continue to watch the competitive intensity and its implications across the financial system,” the lender said in an exchange filing.
Operating expenses during the first half jumped 5% to A$6.72 billion, with around A$1.2 billion spent on a revamp of its technology infrastructure to enhance its generative artificial intelligence capabilities, 10% higher than last year.
“Our financial position enables us to support lending growth, continue investing to accelerate our technology modernisation agenda and enhance our GenAI capability,” CBA said.
Its common equity tier 1 ratio, a measure of spare cash, rose 10 basis points from last year to 12.3%.
($1 = 1.4132 Australian dollars)
(Reporting by Sameer Manekar and Roshan Thomas in Bengaluru; Editing by Sriraj Kalluvila)
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