Commonwealth Bank posts cash earnings of $2.4bn

Commonwealth Bank says improving economic conditions are significantly lowering the risk of loan defaults, but remains cautious while the bumpy recovery continues.

On Wednesday, the nation’s largest bank posted its third quarter trading update, unveiling cash earnings of $2.4bn, up 24 per cent compared to the first half quarterly average.

CBA chief executive Matt Comyn said the improvement had been driven by strong home loan growth and a rebound in business lending.

“The bank remains well placed to support our customers and the broader community as the economic recovery from COVID-19 continues,” Mr Comyn said.

“Our disciplined focus on operational excellence was reflected in continued strong operational performance in the March quarter.

“This was highlighted by strong home loan funding volumes, particularly through our proprietary network, and business lending continuing to grow at greater than three times system levels.”

Its capital buffers also improved, with the bank’s common equity tier one (CET1) ratio increasing 10 basis point to 12.7 per cent.

Total income grew 2 per cent, while expenses were up 1 per cent.

Credit provisions for the period fell to $6.5bn from $6.8bn in the prior quarter.

CBA also recorded a positive results for loan impairment expenses, with a benefit of $136m booked.

Troublesome and impaired assets were $7.8bn, down from $8.2bn in the prior corresponding period.

CBA also revealed 158,000 mortgages worth $54bn were paused during the pandemic through COVID-19 deferral programs, with 81 per cent returning to normal repayments.

Deferral schemes ended on March 31 but 4 per cent of customers still required assistance, the bank noted.

“While it is pleasing to see that the vast majority of customers have smoothly transitioned from the bank’s COVID-19 temporary loan repayment deferral program as it concluded in March, we continue to offer ongoing assistance to those in need,” Mr Comyn said.

The bank also recorded a 13.9 per cent jump in household deposits compared to same quarter last year, with savers adding a further $4bn over the period.