Commonwealth Bank reports profit, home loan declines post-May budget and rate hikes
Consensus Summary
The Commonwealth Bank reported strong financial results for the year, with net profit rising to $10.9 billion or $11 billion in cash terms, despite a significant decline in home loan applications since May. Both ABC and Guardian attribute this downturn to three Reserve Bank interest rate hikes in February, March, and May, as well as federal budget tax changes announced in May, including the abolition of the 50% capital gains tax discount and the introduction of a 30% minimum tax rate on net capital gains. Investor loan applications fell sharply, with ABC reporting a 15% drop and Guardian citing a 28% decline since the May budget, while owner-occupier applications also declined. Despite the slowdown, CBA’s CEO Matt Comyn noted that application volumes appeared to have stabilized by late June, with Guardian suggesting an improvement into 2027. The bank’s net interest margin slightly declined, and operating expenses rose due to inflation and fraud-related costs, while dividends increased by 4% to $5.05 per share. Westpac also reported declines in home loan applications, with ABC citing a 20% drop and Guardian noting 18% for owner-occupiers and 26% for investors. The RBA governor emphasized that interest rates were still more likely to rise, though the market’s slowdown was partly attributed to reduced confidence.
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Key details reported by multiple sources:
- Commonwealth Bank home loan applications fell 15% since May
- CBA net profit rose to $10.9 billion over the last financial year
- CBA net profit rose 7% to $10.87 billion over the year
- CBA cash earnings closed in on $11 billion
- CBA reported a $11bn full-year cash profit on Wednesday
- Three interest rate hikes by the Reserve Bank in February, March, and May
- Federal budget tax changes announced in May, including abolishing the 50% capital gains tax discount and introducing a 30% minimum tax rate on net capital gains
- CBA’s net interest margin (NIM) fell 0.03 percentage points to 2.05%
- CBA operating expenses rose 6% to $13.76 million
- CBA’s final dividend of $2.70 per share, fully franked, taking the total payout to $5.05, 4% higher than last year
- Investor loan applications fell 28% since the May budget tax changes
- Owner-occupier loan applications fell 9% since the May budget
- CBA received close to three applications for every four it received before the budget changes
- CBA expects an improvement in investor loan applications into 2027
Points of Difference
Details reported by only one source:
- CBA’s net profit rose 8% to $10.91 billion (statutory) and 7% to $10.98 billion (cash profit)
- CBA’s loan applications down 17% since the same period last year
- CBA achieved growth at or above the broader banking system across its five major divisions for the first time in 15 years
- CBA is the main financial institution for one in three Australians and one in four Australian businesses
- Westpac reported a 20% decline in home loan applications since May
- NAB flagged a 15% fall in home loan applications
- CBA’s NIM was down 0.03 percentage points to 2.05% compared to the previous financial year
- CBA’s operating expenses rose 6% to $13.76 million due to inflation, fraud, and financial crime
- CBA reported $45bn worth of loans in the last six months of 2025 and $37bn in the first half of 2026
- Average of 19,000 investor loans entered the housing market each month at the start of 2026, worth $14bn
- Owner-occupier new loans fell by roughly 10% since the start of the year
- Investor loan growth fell by about 25% since the start of the year
- CBA’s worst decline in investor applications passed by late June, with applications now stable
- Westpac saw applications slump 18% for owner-occupiers and 26% for investors
- RBA governor Michele Bullock stated on Tuesday that interest rates were still more likely to rise than fall
- CBA’s CEO Matt Comyn said the slump in investor demand was turning around by late June
Contradictions
Conflicting information between sources:
- ABC states CBA’s net profit rose to $10.9 billion over the last financial year, while Guardian states CBA reported a $11bn full-year cash profit on Wednesday
- ABC reports CBA’s net profit rose 7% to $10.87 billion, while Guardian does not specify a percentage increase for the $11bn profit
- ABC states CBA’s loan applications fell 15% since May, while Guardian states investor loan applications fell 28% since the May budget changes
- ABC reports Westpac’s home loan applications fell 20% since May, while Guardian reports Westpac’s owner-occupier applications fell 18% and investor applications fell 26%
- ABC states CBA’s operating expenses rose 6% to $13.76 million, while Guardian does not mention this figure
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