Commonwealth Bank Posts $10.9 Billion Profit Amidst Economic Slowdown
Australia's largest bank reports increased annual profits, but notes growing pressure on household budgets due to rising interest rates and inflation.
Commonwealth Bank of Australia (CBA) has announced a statutory full-year net profit of $10.9 billion, marking a seven percent increase from the previous year, as revenue rose to $30.2 billion. The bank's preferred measure of profitability, cash net profit, also increased by seven percent to $11 billion, surpassing market expectations.
Despite the robust profit figures, CBA chief executive Matt Comyn acknowledged that the Australian economy, while resilient, is experiencing slowing growth. He cited higher interest rates and inflation as factors creating uneven pressure on household incomes and economic activity. Comyn noted that housing activity has softened, partly influenced by recent changes to federal government policies regarding negative gearing and capital gains tax concessions for property.
These policy shifts, introduced in the May budget, have contributed to significant monthly house price declines since 2022. Other major Australian banks have also reported a slowdown in mortgage activity, with Westpac seeing a 20 percent drop in mortgage applications since the budget and NAB reporting a 15 percent decrease in home loan applications for the June quarter.
Homebuyers received a brief reprieve when the Reserve Bank of Australia held interest rates steady for a second consecutive meeting. However, economists characterized this as a 'hawkish hold,' indicating a potential bias toward future rate increases. Analysts suggest that while mortgage holders have a temporary respite, they are not yet entirely free from the risk of further rate hikes.
In the 2025/25 financial year, CBA achieved growth at or above the system average across its five core domestic product categories: home lending, business lending, consumer finance, household deposits, and business deposits. This marks the first time CBA has accomplished this feat, and the first time any major Australian bank has done so in 15 years. Comyn stated that the bank remains the primary financial institution for one in three Australian individuals and one in four Australian businesses.
The bank reported a net interest margin of 2.05 percent, a slight decrease from the previous year but an improvement from the first half of the 2025/26 financial year. CBA shares were trading below $174 on Tuesday afternoon, down 2.5 percent for the day but up 8.1 percent year-to-date. The bank's valuation, with a price-to-earnings ratio of 28.7, is considered high compared to global peers, with US banking giants like Bank of America and Morgan Stanley trading at roughly half that valuation.
CBA declared a final dividend of $2.70 per share, bringing the total for the year ending June 30 to $5.05, a four percent increase on the prior year.