CBA Posts Record Cash Earnings Amid Slowing Mortgage Demand

Australia's largest lender by market capitalization and mortgage share, Commonwealth Bank of Australia (CBA), posted record full-year cash earnings, exceeding market expectations. The bank attributed this success to robust lending volumes, but warned of a decline in mortgage demand since the government's tax changes in May.

CBA CEO Matt Comyn stated that growth is slowing due to high interest rates and inflation putting uneven pressure on household incomes and economic activity. This slowdown has been exacerbated by the Reserve Bank of Australia raising interest rates to post-pandemic highs, affecting borrowers already struggling with cost-of-living strains.

New home loan applications have declined 15% since May, while investor applications fell 28%. CBA's home lending and business lending volume growth outpaced industry gains in the year to June 30. The bank's record full-year cash earnings of AU$10.98 billion surpassed the Visible Alpha consensus estimate of AU$10.85 billion.

CBA also declared a record final dividend of AU$2.70 per share, compared with last year's AU$2.60 apiece. Its annual net interest margin fell 3 basis points to 2.05% from last year.