Bank revenue growth rolls on
The Commonwealth Bank of Australia is on track to make another record full year profit, after recording earnings of $2.1 billion in the three months to the end of September.
The unaudited September quarter result is up 14 per cent from the $1.85 billion in unaudited cash earnings the bank recorded during the same period last year.
It follows a cash profit of $7.8 billion for the 12 months to June 30 this year.
The Commonwealth’s net profit for the quarter was also $2.1 billion.
Morningstar analyst David Ellis said the result put the bank on track for a record full year profit of $8.25 billion.
“Despite slightly lower margins we consider the major banks’ ability to reprice loans remains intact, underpinning their competitive strengths … ” he said.
“CBA remains well capitalised, with strong liquidity levels and funding positions.”
In its quarterly trading update, the Commonwealth said a combination of solid revenue growth and cost discipline contributed to the quarterly result.
But the bank’s group net interest margin fell during the quarter as a result of the lower interest rate environment.
The net interest margin is the margin between the interest a bank pays on deposits and that which it attaches to loans.
Lower interest rates helped spur growth in new business activity compared to a year ago, though total credit growth was modest due to higher levels of loan repayments.
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The Commonwealth said household deposit growth was strong during the quarter while stock market gains had provided a boost for the bank’s wealth management business.
Meanwhile, insurance premiums increased two per cent during the quarter.
Commonwealth Bank shares rose 76 cents to $77.76 shortly after the start of trading on Wednesday.
