Commonwealth Bank boss Matt Comyn said Australia’s surging migration intake was helping to prop up the nation’s economy, even if it is blamed for pushing house prices and rents to sky-high levels.
Mr Comyn was speaking as Australia’s biggest lender recorded a profit of $2.4 billion for the first three months of the year, five per cent lower than the same period in 2023.
In a trading update released to the ASX on Thursday, Mr Comyn told investors that its business, and the Australian economy, remained sound despite the housing crisis, and inflation levels untamed by rising interest rates.
‘Unemployment remains low, supported by business and government investment and elevated terms of trade,’ he said.
‘We recognise that all households are feeling the impact of higher inflation and higher rates; however, immigration is providing a structural tailwind for the economy.’
But despite the more upbeat economic outlook, CBA is exposed to those now struggling with loan repayments in a high-rate environment.
The nation’s largest lender recorded a rise in loan impairment expenses of $191m in the first three months of 2024, with ‘moderate’ increases in both consumer arrears and troublesome corporate exposures.
Arrears in home lending rose to 0.6 per cent, up 9 basis points, as households came under increased financial pressures, while late payments on credit cards also jumped 8 basis points to 0.7 per cent. Both measures remain below their historic averages.
More troublingly, 90-day-plus repayment on personal loans jumped 0.2 per cent to 1.3 per cent – above their long-run average.
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‘We expect to see further increases in arrears in the months ahead given continued pressure on real household disposable incomes,” Mr Comyn said.
Growth in the bank’s home loan book edged slightly higher, up $4.2bn, as rising prices resulted in people having to borrow more.
Lending in its business sector jumped $2.7bn. Household deposits climbed $5.3bn.
The bank’s net-interest margin – a key metric of bank profitability that calculates the difference the bank is earning in interest on loans compared with what it is paying in interest on deposit – sank as fierce competition in lending hit its bottom line.
Higher staff costs and amortisation pushed expenses 2 per cent higher, while operating income dipped 1 per cent.
