Investing.com -- Commonwealth Bank Of Australia (ASX: CBA ), the country’s biggest lender, logged a strong third-quarter profit on Tuesday, as increased mortgage and business lending volumes helped offset pressure from heightened competition.
CBA’s cash net profit after tax was A$2.6 billion (A$1 = $0.6781) in the three months to March 31, a 10% rise from the same period last year. This was fueled by a A$6.9B rise in home lending and a A$2.6B jump in business lending.
CBA’s household deposits also jumped by A$6.2B.
But CBA, along with its peers, now faces heated competition in mortgage lending and in retaining deposits, as customers seek better home lending rates and higher yielding deposits. This saw the bank’s net interest income fall 2% to A$5.82B.
The bank warned that competition for home loans remained intense in the country.
Australian mortgage volumes are also expected to drop in the coming months, amid increased cost of living pressures and with interest rates standing at over decade highs. The Reserve Bank also recently warned that interest rates will likely increase further to curb stubborn inflation, further pressuring the economy.
“Many of our customers are feeling the strain of higher interest rates and the rising cost of living,” CBA Chief Executive Matt Comyn said in a statement. “As higher interest rates impact the Australian economy in the period ahead, we expect economic growth to continue to moderate.”
CBA’s peers, ANZ Group Holdings Ltd (ASX: ANZ ), Westpac Banking Corp (ASX: WBC ), and National Australia Bank Ltd (ASX: NAB ), all logged strong earnings over the past week. But they warned that earnings had likely peaked in the face of a potential credit slowdown, as well as increasing competition in the home lending space.
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