Australia’s CBA sees 11% jump in profit

Bloomberg

Commonwealth Bank of Australia (CBA), the country’s largest lender, posted an 11% jump in profit but warned that steeper borrowing costs and inflation were hitting consumer demand.
The Sydney-based bank warned of a challenging outlook as the twin economic pressures worsened the cost-of-living burden, when it reported full-year earnings. It posted a cash profit of $6.7 billion for the year through June, which was slightly higher than analyst expectations.
“Against many measures, Australian households and businesses are in a strong position given low unemployment, low underemployment, and strong non-mining investment,” CEO Matt Comyn said. “However, inflation is high, and we have seen a rapid increase in the cash rate which is
negatively impacting consumer confidence.”
While Australia’s largest lenders have all passed on the Reserve Bank’s record series of interest rate hikes since May, they’re yet to show a significant rise in problem loans even after years of intense competition in the mortgage market. However, with the country’s debt-laden consumers now grappling with the fastest tightening cycle in a generation, sentiment has taken a cautious turn.
Commonwealth Bank also reported an 18 basis point drop in the closely-watched net interest margin — which compares the bank’s deposit rate and what it charges to lend — to 1.9%, citing a big increase in low-yielding liquid assets and lower home loan margins. The bank still expects those margins to increase as interest rates continue to rise.