"Downside risks are building as slowing demand and persistent inflation impact Australian businesses," Comyn said. — Bloomberg
SYDNEY: Commonwealth Bank of Australia (CBA) chief executive officer Matt Comyn says risks are mounting in the economy after profit at the country’s largest lender topped expectations even as it continues to battle strong competition in the mortgage market that’s driving down margins.
Cash profit from continuing operations came in at A$5.02bil in the six months ended Dec 31, the Sydney-based firm said in a statement.
That beat the average estimate of A$4.92bil in a Bloomberg survey of analysts. Its net interest margin dropped 11 basis points to 1.99%.
With margins under pressure from the fiercely contested market for home loans, investors are scrutinising the bank’s 20% share price surge since the start of November and are weighing whether expectations have run too far ahead.
Comyn, who has been prepared to lose a little market share in mortgages to keep rates elevated, is grappling with softer inflation in Australia and as traders bet that benchmark interest rates will start to come down later this year.
“The economy has been fairly resilient, supported by a strong labour market, savings and repayment buffers, population growth and relatively high commodity prices,” Comyn said in the statement.
“However, downside risks are building as slowing demand and persistent inflation impact Australian businesses. Ongoing geopolitical tensions also create uncertainty.”
CBA will pay an interim dividend of A$2.15 per share, topping the estimate for A$2.11, and said it will continue to target a full-year payout ratio of 70%-80% in its cash profit. — Reuters
