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In a recent shareholder meeting held on Wednesday, 11 October, the Commonwealth Bank (CBA) conveyed its prediction of a 9 per cent upturn in home values for the upcoming year.
The bank also anticipates 2024 will bring a further 5 per cent lift in home values.
Chief executive Matt Comyn highlighted the lingering impact of previous interest rate hikes by the RBA on the housing sector.
Mr Comyn acknowledged the financial pressures faced by many Australians in the current environment, with the rising cost of living affecting numerous customers.
“While most remain well-positioned, we recognise that some customers are finding the current environment very tough,” Mr Comyn said.
“We are contacting every customer coming off a fixed-rate mortgage to discuss options, as well as providing flexibility and financial assistance for those who need it.”
The bank’s digital capabilities play a pivotal role in enhancing customer visibility and financial insight, he observed.
Despite recognising the financial challenges faced by numerous Australians due to higher mortgage rates, Mr Comyn reflected on the bank’s $10 billion profit for the 2023 fiscal year, attributing it to CBA’s status as Australia’s largest bank.
“Ultimately, the size of the profit is a function of being Australia’s largest bank,” Mr Comyn said.
The bank serves over 17 million customers and manages approximately $900 billion in savings and nearly $1 trillion in loans.
“This year we lent $35 billion to small businesses to help them grow, helped 150,000 people buy a new home, and helped depositors earn nearly $11 billion in additional interest income,” Mr Comyn said.
Over 12 million Australians are CBA shareholders, either directly or through their super funds, and the bank has returned $10 billion to shareholders through dividends and buybacks, Mr Comyn said.
“Our customer focus, coupled with consistent, disciplined execution, has delivered volume growth in all core lines of business,” Mr Comyn said.
On the back of higher interest rates and increasing home values, the CommBank HSI Index reported that home buying had experienced a minor setback in September, declining by 0.4 per cent, marking an annual drop exceeding 10 per cent.
Nevertheless, with interest rates currently at their peak or near it, home buying activity in the forthcoming months should enjoy support from strong demand, albeit with a limitation due to a low supply of available properties.
The index analysis revealed that household spending fell in five of the 12 underlying categories, encompassing recreation, utilities, health, household goods, and household services.
This resulted in an annual spending growth reduction from a peak of 18.7 per cent in August 2022 to 1.8 per cent.
Notably, spending on household services experienced a 0.8 per cent decrease in September, marked by declines in trading platforms, fund managers, and real estate agents.
Looking forward, the major bank anticipates a reduction in pressure on households as inflation continues to stabilise.
“The economy remains fundamentally sound, and we maintain a positive outlook,” Mr Comyn said.
Meanwhile, Genevieve Bell AO has announced her retirement from the board, effective from 31 October 2023, as she prepares to assume her new role as vice-chancellor of the Australian National University.
Chairman Paul O’Malley expressed his gratitude to Ms Bell for her significant contributions during her tenure since January 2019, highlighting the immense value of her skills and experience to the board.
The board extended its congratulations to Ms Bell on her appointment as vice-chancellor.
[Related: CBA announces reduced buffer alternative]
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