Banks are also focused on business clients, who are often relatively well off.
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In January this year Barrenjoey analyst Jon Mott highlighted the risk that housing credit growth was “extremely skewed to the rich” after he crunched the numbers in CBA’s first-half results. Mott found strong growth in investor mortgage lending to households earnings more than $500,000 in recent years.
Former ANZ Bank chief executive Shayne Elliott also claimed in 2023 home loans were becoming a product for the rich, and he said this was partly because of tighter regulation.
Comyn’s comments came as CBA’s cash profits in its first quarter rose 2 per cent to $2.6 billion, with the banking giant reporting stronger momentum in its massive mortgage and deposit portfolios, alongside growth in business banking.
CBA said it had grown its home loan book by $9.3 billion in the quarter, slightly more than the industry average, while it hoovered up an extra $17.8 billion in household deposits – also faster growth than the market average.
The bank said its charges for bad loans were broadly flat, with lower consumer arrears and lower charges for troubled business corporate loans.
The bank’s underlying margin – which measures funding costs compared with what it charges for loans – was “slightly lower” as a result of customers switching to higher-interest deposits, competition and the lower interest rate environment.
CBA shares slumped 3.7 per cent in early trade.
Comyn said cost of living pressures were challenging for many customers, but households and businesses had felt some relief from the decline in interest rates this year. After the recent jump in inflation, Comyn said he thought interest rates were on hold for now, with more information on the December quarter inflation data due in late January.
“We always thought it was going to be a relatively shallow rate-cutting cycle, but it’s certainly possible that rates are on hold for an extended period now,” he said, adding the RBA would be driven by economic data.
He said the bank had a positive view on Australia’s economic prospects.
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“Despite escalating geopolitical and macroeconomic uncertainty, we are optimistic on the outlook for the country. We are closely watching the increased competitive intensity and implications across the financial system, and we will continue to adjust our settings as appropriate,” Comyn said in a statement.
CBA’s quarterly update caps off a round of results from the country’s major banks over this week and last.
KPMG said combined profit after tax among Westpac, National Australia Bank, ANZ Bank and CBA (which delivered its full-year results in August) edged 0.5 per cent lower to $29.8 billion, as higher operating income was offset by growth in costs.
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