CBA share price on watch following $2.4b third quarter profit

CBA delivered another bumper profit for the three months.

| More on:
A woman wearing yellow smiles and drinks coffee while on laptop.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Commonwealth Bank of Australia (ASX: CBA) share price will be one to watch closely today.

That's because the banking giant has just released its third quarter update.

Let's see what the bank reported for the three months ended 31 March.

CBA share price on watch following Q3 update

  • Operating income down 1%
  • Operating expenses up 2%
  • Unaudited statutory net profit after tax down 5% to $2.4 billion
  • CET1 ratio of 11.9%

What happened during the quarter?

For the three months ended 31 March, CBA reported a 1% decline in operating income. This reflects one less day in the quarter and slightly lower net interest margins. The latter was driven primarily by continued competitive pressures and customers switching to higher yielding deposits. This was largely offset by higher earnings on replicating portfolio and equity hedges.

CBA's expenses increased 2% due to higher amortisation and staff costs, which were partially offset by productivity initiatives.

This ultimately led to Australia's largest bank reporting an unaudited statutory net profit after tax of $2.4 billion for the three months. This is down 3% on the first half average and 5% on the prior corresponding period.

What else did CBA report?

CBA reported improved momentum in volume growth. This was delivered across home lending and household deposits in the quarter.

It advised that in the Retail Bank, transaction accounts continued to grow with an increase of ~143,000 accounts in the quarter. This was mainly driven by new migrant account openings.

Home loans grew $4.2 billion during the quarter. However, this was at 0.7x system for the three months.

Its proprietary mix for home loans represented 65% of new business flows for the quarter. Household deposits grew $5.3 billion in the quarter.

CBA has been working hard on its business banking operations. It advised that it has continued to build its Business Banking franchise through deep transaction banking relationships.

Business transaction accounts increased by ~25,000 in the quarter to over 1.22 million accounts. This is up 10% on the prior comparative period.

Business lending volumes grew above system at 1.1x for the three months, with diversified growth across multiple sectors.

Rising arrears

Finally, the bank's balance sheet remains strong despite an increase in arrears. It reported a loan impairment expense of $191 million for the quarter, or 8 basis points of average Gross Loans and Acceptances (GLAA).

Home loan arrears increased during the quarter to 0.61% (+9 basis points), as higher interest rates continue to impact some borrowers. Credit card arrears increased during the quarter (+8 basis points) in line with seasonal trends. Personal loan arrears increased (+20 basis points) during the quarter, with elevated arrears observed for customers more susceptible to cost of living pressures.

Management warned that it expects to see further increases in arrears in the months ahead given continued pressure on real household disposable incomes.

Nevertheless, CBA finished the period with a healthy customer deposit funding ratio of 75%, LCR of 138%, and NSFR of 120%.

Should you invest $1,000 in Pushpay right now?

Before you buy Pushpay shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Pushpay wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Bank Shares

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.
Bank Shares

Why does Macquarie think the big 4 ASX bank shares are 'on borrowed time'?

With Australian interest rates likely to fall, the banks face compressed margins in the medium term.

Read more »

Bank building in a financial district.
Bank Shares

What happened with the big four ASX 200 bank stocks in April?

CBA led the charge among the ASX 200 bank stocks in April. But why?

Read more »

A young male ASX investor raises his clenched fists in excitement because of rising ASX share prices today
Bank Shares

Why did CBA shares jump over 10% in April?

It was a great month for owners of this banking giant's shares.

Read more »

Happy young woman saving money in a piggy bank.
Bank Shares

Which big 4 ASX bank share does Macquarie currently prefer?

Here’s why Macquarie likes this bank the most.

Read more »

Bank building with word Bank on it.
Bank Shares

ASX bank shares outperformed in April. Will this continue according to Macquarie?

What drove the strong performance by banks in April?

Read more »

a couple and their baby sit together at their computer carrying out digital transactions and smiling happily.
Bank Shares

3 things about BOQ stock every smart investor knows

This smaller bank has aspirations to become a larger competitor.

Read more »

Man raising both his arms in the air with a piggy bank on his lap, symbolising a record high.
Bank Shares

CBA shares reach new all time high after 4% surge

CBA shares have done it again.

Read more »

Bank building in a financial district.
Bank Shares

Would I buy ANZ shares right now?

Would the bank be a good investment right now?

Read more »