The Commonwealth Bank has started the financial year with a $2.3 billion first quarter cash profit, up from $2.1 billion a year ago.
Net profit for Australia’s largest lender increased by even more, up 14 per cent for the three months to September’s end to $2.4 billion.
Quarterly results are unaudited.
However, the fierce competition for loans between big lenders is biting.
The bank said its net interest margin, a measure of the profitability of its loans, was marginally lower, with improved wholesale funding costs more than offset by competitive pricing impacts.
The bank said revenue growth was exceeding rising costs.
Following the trends of the other three big banks, it also reported lower impaired assets of $3.1 billion with a total loan impairment expense of $198 million.
The big banks’ profit increases announced over the past week have been driven by falling bad debts rather than income growth.
Underlying trading income during the quarter was consistent with fiscal 2014 rates, CBA said.
Strong new business lending levels were balanced by higher repayment activity in a low interest rate environment.
In commercial lending, system credit growth remained subdued while household deposits continued to lift, with the CBA growing slightly ahead of system, the bank said.
Customer deposits were 63 per cent of the bank’s total funding at the end of September.
CBA’s capital ratio – its amount of capital compared to risk-weighted assets – had dropped to 8.6 per cent, from 9.3 per cent, since June 30, following the declaration of its final dividend and share buyback.