CBA chief Matt Comyn said the economy remained resilient.
The update showed CBA’s operating income was flat in the quarter,driven by loan growth,while its total operating expenses were up 3 per cent.
Its net interest margin – a measure of profitability which compare funding costs with what banks charge for loans – was lower,as the bank faced competitive pressures and lower other operating income.
As banking margins are crunched by fierce competition in home lending,Comyn said some of the bank’s peers experienced what could be “the biggest negative margin erosion in banking history.” But he said CBA’s net interest margin came in ahead of market expectations,driven by the bank’s “willingness to step back on pricing where we think it’s unsustainable.”
Comyn said he expected refinancing of loans to play a role in home loan competition “well into calendar 2024” but that the peak period was past,and that the bigger factor would be the intensity with which other banks competed.
“Some banks are chasing volume and trying to win back some of the volume or market share that they’ve lost and clearly that’s coming at a high cost,” he said,adding that it was one of the most competitive times in the last two decades for home loan pricing.
However,Comyn said amid the rapid deterioration in mortgage margins,the bank intended to remain disciplined and focused on sustainable long-term pricing.
“We prefer to be delivering volume growth,but we’re comfortable not achieving that where we don’t think the pricing is commensurate with a sustainable and thoughtful approach,” he said.