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One thing propping up Aussie economy

Commonwealth Bank unveiled its second quarterly decline in profits. Picture: NCA NewsWire / Morgan Sette

Commonwealth Bank boss Matt Comyn said Australia’s surging migration intake was helping to prop up the nation’s economy, even as his bank recorded its second consecutive quarterly profit drop.

To the three months ended March 31, profits sank to $2.4bn – just eclipsing analysts’ forecasts. The figure was 5 per cent lower than the 2023 March quarter, and 3 per cent below the quarterly average recorded in the six months to December 31.

In a trading update released to the ASX on Thursday, Mr Comyn told investors that its business, and the Australian economy more broadly, remained sound.

“Unemployment remains low, supported by business and government investment and elevated terms of trade,” he said.

CBA boss Matt Comyn said immigration was providing a tailwind to the Australian economy. Picture: NCA NewsWire / Luis Ascui

“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, 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 pressures from elevated interests, 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.

Arrears across credit card, home and personal loans ticked higher during the March quarter. Picture: NCA NewsWire / Morgan Sette

“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 0.7 times system or $4.2bn, while lending in its business jumped 1.1 times system or $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.