Commonwealth Bank has recorded a 7 basis point rise in home loans more than 90 days late, reaching 0.80 per cent, as higher interest rates and inflation squeeze household budgets. The bank reported a flat quarterly profit of $2.8 billion and said its provisions for bad loans remained unchanged at $6.5 billion.
The update, covering the quarter to September 30, showed operating income and expenses both rose 3 per cent. Profit was flat on the preceding quarter but 8 per cent higher than the same period last year. CBA attributed the increase in arrears to cost-of-living pressures from higher interest rates and inflation.
Chief executive Matt Comyn said in a statement that the bank was committed to helping customers through higher costs. “Higher inflation and interest rates continue to place uneven pressure on household incomes and business activity,” he said. “While economic growth is slowing, the Australian economy remains resilient, supported by low unemployment and a strong public infrastructure and private investment pipeline.”
The bank said its provisions provided strong coverage for any issues.
Analysis
Why This Matters
- Rising arrears signal that some homeowners are struggling with higher mortgage repayments, a key indicator of household financial health.
- CBA's flat profit and unchanged provisions suggest the bank believes the broader economy can absorb current pressures without a sharp rise in defaults.
- The update comes amid debate over whether the Reserve Bank will cut interest rates later this year, with slowing growth and persistent inflation pulling in opposite directions.
Background
Commonwealth Bank is Australia’s largest home lender, making its quarterly trading update a closely watched gauge of consumer stress. Interest rates have risen sharply since 2022, pushing up mortgage repayments. The bank’s assessment of a resilient economy, supported by low unemployment, has been a consistent theme from its leadership.
What to Watch
- Whether the arrears rate continues to climb in the December quarter, when seasonal spending and lingering inflation may add to pressure.
- Any change in CBA’s provisions for bad loans, which would signal a shift in the bank’s view of credit risk.
- The RBA’s next rate decision in December, which could affect borrowers’ ability to keep up with repayments.
Checked
12 claims in this story checked against 1 source: 12 supported.
Show each claim
- SupportedCBA reported an uptick in late mortgage payments while its quarterly profit held steady.Sydney Morning Herald - Latest News: “recorded a 7 basis point increase in home loans with payments that were more than 90 days late, taking the rate to 0.80 per cent. ... That profit figure was flat on preceding quarters”
- SupportedMatt Comyn said the Australian economy remains resilient despite pressure from higher costs.Sydney Morning Herald - Latest News: ““Higher inflation and interest rates continue to place uneven pressure on household incomes and business activity,” he said. “While economic growth is slowing, the Australian economy remains resilient, supported by low unemployment and a strong public infrastructure and private investment pipeline.””
- SupportedHome loans more than 90 days late rose by 7 basis points to 0.80 per cent.Sydney Morning Herald - Latest News: “recorded a 7 basis point increase in home loans with payments that were more than 90 days late, taking the rate to 0.80 per cent.”
- SupportedHigher interest rates and inflation squeezed household budgets as late payments rose.Sydney Morning Herald - Latest News: “CBA attributed the higher home loan arrears to cost of living pressures from higher interest rates and inflation.”
- SupportedCBA reported quarterly profit of $2.8 billion, flat on the preceding quarter.Sydney Morning Herald - Latest News: “The update covers the quarter that ended on September 30 and showed the bank had made $2.8 billion in profit ... That profit figure was flat on preceding quarters”
- SupportedCBA’s provisions for bad loans remained unchanged at $6.5 billion.Sydney Morning Herald - Latest News: “In total though, the bank’s provisions for bad loans were flat at $6.5 billion”
- SupportedThe update covered the quarter that ended on September 30.Sydney Morning Herald - Latest News: “The update covers the quarter that ended on September 30”
- SupportedOperating income and expenses each rose 3 per cent.Sydney Morning Herald - Latest News: “with operating income up 3 per cent but expenses up by the same amount.”
- SupportedProfit was 8 per cent higher than in the same period of the previous financial year.Sydney Morning Herald - Latest News: “That profit figure was flat on preceding quarters but up 8 per cent on the same period in the last financial year.”
- SupportedComyn said in a statement that CBA was committed to helping customers through higher costs.Sydney Morning Herald - Latest News: “Chief executive Matt Comyn said in a statement that CBA was committed to helping its customers through the higher cost of living”
- SupportedComyn said, “Higher inflation and interest rates continue to place uneven pressure on household incomes and business activity.”Sydney Morning Herald - Latest News: ““Higher inflation and interest rates continue to place uneven pressure on household incomes and business activity,” he said.”
- SupportedCBA said its provisions gave it strong coverage for any issues.Sydney Morning Herald - Latest News: “which CBA said gave it “strong” coverage for any issues.”