Australia’s biggest bank CEO cautions on risks to economy

COMMONWEALTH Bank of Australia (CBA) chief government officer Matt Comyn mentioned dangers are mounting within the economic system after revenue on the nation’s largest lender topped expectations even because it continues to battle sturdy competitors within the mortgage market.

Cash revenue from persevering with operations got here in at A$5.02 billion (S$4.4 billion) within the six months ended Dec 31, the Sydney-based agency mentioned on Wednesday (Feb 14). That beat the typical estimate of A$4.92 billion in a Bloomberg survey of analysts.

With margins underneath stress from the fiercely contested marketplace for dwelling loans, buyers are scrutinising the financial institution’s 20 per cent share worth surge because the begin of November and are weighing whether or not expectations have run too far forward. CEO Comyn, who has been ready to lose slightly market share in mortgages to maintain charges elevated, is grappling with softer inflation in Australia and as merchants wager that benchmark rates of interest will begin to come down later this 12 months.

“The economy has been fairly resilient, supported by a strong labour market, savings and repayment buffers, population growth and relatively high commodity prices,” Comyn mentioned. “However, downside risks are building as slowing demand and persistent inflation impact Australian businesses. Ongoing geopolitical tensions also create uncertainty.”

CBA can pay an interim dividend of A$2.15 per share, topping the estimate for A$2.11, and mentioned it can proceed to focus on a full-year payout ratio of 70 to 80 per cent in its money revenue.

Consumer arrears elevated in latest months, however stay traditionally low, reflecting ongoing pressures from greater rates of interest and the elevated price of dwelling, in keeping with the assertion.

Comyn additionally mentioned his agency expects “financial strain to continue in 2024, with an uptick in our arrears and impairments. We remain well provisioned and capitalised, with capacity to navigate an uncertain economic environment”. BLOOMBERG