Commonwealth Bank of Australia (CBA) reported a rise in mortgage delinquencies as higher interest rates and inflation continue to strain household budgets. The bank's latest trading update revealed a 7 basis point increase in home loans overdue by more than 90 days, bringing the rate to 0.80%. CBA also set aside an additional $105 million to cover potential bad loans, though actual losses remain below pre-pandemic levels.
The update covered the quarter ending September 30, during which CBA recorded a $2.8 billion profit, with operating income and expenses both up 3%. While profit was flat compared to the previous quarter, it marked an 8% increase from the same period last year. CBA attributed the rise in mortgage arrears to cost-of-living pressures, noting that the Reserve Bank of Australia's recent interest rate hikes have added significant financial strain.
ANZ Bank also reported a similar trend, with 0.95% of its home loans overdue by more than 90 days. The RBA raised the cash rate to an 18-year high on November 3, marking its fifth hike this year. RBA governor Michele Bullock warned that the increases could make consumers feel as though the economy is in a recession due to reduced purchasing power.
Despite the challenges, CBA CEO Matt Comyn emphasized the bank's commitment to supporting customers and defended the resilience of the Australian economy. He noted that while economic growth is slowing, low unemployment and strong investment pipelines provide stability. Data from property analysis firm Cotality showed that house prices in Australia's capital cities have fallen 8.1% over the past seven months, nearing the largest decline in 40 years.