Commonwealth Bank has reported nearly $5 billion in profits for 1H22 on the back of continued strong growth in the home loan market.
Australia’s biggest lender saw 23% growth in cash profits, with the resurgent economic outlook and the still-booming mortgage sector responsible for the bulk of the success.
Its share price spiked as a result, jumping 5% at the opening of the ASX on the back of the strong results.
Home loans grew above system, rising 8.5% and topping out at $40.4 billion, while business loans also grew, hitting 12.5% and $13.2 billion.
Despite the economic troubles inflicted by the pandemic, defaults and arrears remained low.
“The Bank has delivered a strong financial result in a low-rate environment. This has been achieved through continued customer focus and disciplined operational execution,” said Matt Comyn (pictured), CEO of Commonwealth Bank.
“Higher cash profits were a result of continued volume growth across the business in home lending, business lending and deposits lower loan impairment expense due to the improving economic outlook, and a reduction in remediation expenses.
“We have continued to invest in operational execution and the ongoing strengthening of our business, consistent with our strategic priorities.”
Comyn said that the strong results were highly informed by the rebound seen in the wider economy.
“We expect the Australian economy to have a strong year in 2022 despite early challenges from the Omicron strain of COVID-19,” he said. “Both the unemployment rate and the underemployment rate are at the lowest since 2008, with high participation rates.
“Australian households have accumulated savings and stronger wage growth is expected. An increase in demand for goods relative to services, supply-chain constraints and tightening labour markets will likely lead to a further increase in the rate of inflation.
“While the inflationary risk does not currently appear as high in Australia, relative to global peer nations, the RBA has announced the end of quantitative easing in February.
“The CBA Economics team’s forecast is for a modest monetary policy tightening cycle through FY23, with the first official interest rate increase forecast for August 2022.”
