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The Commonwealth Bank of Australia (CBA) has released a trading update for the three months ending March 2023 (3Q23), revealing a rise in its home lending growth of $6.9 billion.
When comparing March 2023 with March 2022 figures, the major bank home lending book was up 5.2 per cent (or 1.0 x system), as the major bank focused on "retaining customers in a highly competitive market".
If excluding CBA's direct-only lender Unloan, as well as Bankwest, the major bank grew at 0.8x system.
According to CBA, competition for home loans remained fierce in Australia and New Zealand as its net interest income was 2 per cent lower than the quarterly average of 1H23, primarily due to “competitive pressure in home loan pricing and customers switching to higher yielding deposits.”
The major bank recorded home loan arrears at 0.44 per cent reflecting “low levels of unemployment and stability in savings buffers”, while consumer finance arrears increased marginally but still remained low in relation to long-run average loss rates.
With the full impacts of the Reserve Bank of Australia’s (RBA) interest rate increases yet to be seen in the months ahead, the major bank stated it’s expecting further increases to arrear rates.
Household deposits grew $6.2 billion during the quarter.
In addition, CBA reported an unaudited cash net profit after tax (NPAT) of $2.6 billion for 3Q23, up 1 per cent on the 1H23 quarterly average and up 10 per cent on the previous corresponding period.
CBA chief executive Matt Comyn said the major bank “remains committed to supporting customers” through economic headwinds as they feel pressure from rising cost of living and higher interest rates.
“While economic growth is expected to moderate, Australia is well positioned to deal with the domestic and global challenges given the country’s strong banking system and other economic tailwinds such as population growth and relatively high commodity prices,” Mr Comyn said.
Cashbacks scrapped
As well as releasing its trading update, CBA also announced on Tuesday that it would be getting rid of cashbacks with its mortgage products as of 1 June 2023.
The major bank currently has a $2,000 cashback offer in the market, however, it previously flagged that these types of offers are resulting in a squeeze on net interest margin.
A CBA spokesperson told The Adviser: “Each year, CBA supports hundreds of thousands of Australians to achieve their home ownership and investment dreams.
“Now, in response to customer, broker and lender feedback that in the current economic environment, customers are focused on value, simplicity and certainty, CBA will no longer offer cashback payments on new applications for home loan products from 1 June 2023.”
[RELATED: Home buying intentions down 13.9%: CBA]
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