Commonwealth Bank of Australia’s record profit is clouded by 15% mortgage application slump
Lender’s full-year cash profit rises 7.1% to record A$10.98 billion; it warns of a slowing economy
Commonwealth Bank of Australia (CBA) reported a record A$10.98 billion (US$7.75 billion) full-year cash profit, but its success is overshadowed by a 15% drop in mortgage applications since May. The property tax changes implemented in May disrupted the country's largest lender, one of several challenges it faces despite the record profit.
High interest rates, inflation and slowing economy have pressured household budgets and economic activity. CBA's cash earnings for the fiscal year ended June 30 exceeded the Visible Alpha consensus estimate of A$10.85 billion and grew 7.1% year-on-year. However, its net interest margin dropped to 2.05%, down three basis points from the previous year.
CBA chief executive Matt Comyn attributed the mortgage application decline to the Labor government's May 12 Budget changes to property tax concessions for investors. Investor lending applications fell by 28%, but Comyn noted that the trend has stabilized. The drop in applications follows similar warnings from rivals, including Westpac and NAB.
The changes have impacted Australia's property market, with auction clearance rates hitting six-year lows and property prices down about 2% over four months. CBA's loan impairment expense increased to A$788 million, a 9% rise from the previous year, due to Australian customers facing cost-of-living pressures. The bank also forecasted a doubling of benefits from artificial intelligence usage in the 2027 financial year.
CBA declared a record final dividend of A$2.70 per share, a 4% increase from the previous year, with a total dividend of A$5.05, up 4% year-on-year.
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