Commonwealth Bank of Australia has posted a modest rise in profits for the financial year as mortgage arrears remain relatively low.
Australia’s biggest lender on Wednesday reported a five per cent increase in full-year net profit after tax to $10.2 billion – slightly above consensus expectations of $10.1 billion.
Operating income was up 13 per cent to $27 billion as the bank’s net interest margin – how much it earns on loans minus how much it pays on deposits – climbed 17 basis points higher due to the Reserve Bank’s cash rate hike spree.
However, the margin dropped five basis points over the last six months, indicating bank profit margins are on the way down.
The proportion of customers whose mortgages were in arrears by more than 90 days increased slightly, but the share remained relatively low at 0.47 per cent, which the bank attributed to low unemployment and high savings levels.
Chief executive Matt Comyn said the bank was well-positioned to ride out economic headwinds with a conservative balance sheet and a resilient Australian banking system following the implementation of regulatory reforms.
“However, there are signs of downside risks building as rising interest rates have a lagged impact on mortgage customers and other cost of living pressures become a financial strain for more Australians,” he said in an announcement to investors.
The bank paid a dividend of $2.40 per share fully franked, taking its full-year dividend to $4.50.