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The Commonwealth Bank of Australia (ASX: CBA) has experienced an increase in home loan and credit card arrears in the third quarter of FY25, as Australia’s largest company warned of a potential slowdown in the domestic economy due to “heightened risk to the global economy from geopolitical and macroeconomic uncertainty”.
The pain is being felt by both consumers and business, according to the CBA, which says consumer arrears and corporate “troublesome and non-performing exposures” (TNPE) increased during the March quarter.
CBA booked a loan impairment expense of $223 million in the quarter, with collective and individual provisions slightly higher. The impairment represents 9 basis points of average gross loans and acceptances – up from 7 basis points in the first half of FY25.
Home loan arrears increased by five basis points over the quarter to 0.71 per cent, while personal loan arrears lifted 19 basis points, which the bank says is largely in line with seasonal trends.
Corporate TNPE was higher at $6.6 billion, or 1.06 per cent of corporate total committed exposure, which the CBA says reflects “movements in single name exposures across several sectors”.
CBA recorded total credit provisions of $6.4 billion for the quarter, with a slight increase in collective provisions to $5.6 billion broadly in line with portfolio growth, and a marginal increase in individual provisions to $780 million.
“We know it has been another challenging period for many Australian households and businesses dealing with cost-of-living pressures,” says CBA chief executive officer Matt Comyn.
“We have remained focused on proactively engaging with our customers on a range of support options to help those who need it most.
“Our focus on supporting our customers, investing in our franchise to deliver superior customer experiences and executing our strategy with consistency and discipline has delivered solid results for our shareholders.”
Despite the lift in loan impairments, CBA has recorded an unaudited statutory net profit after tax (NPAT) of $2.6 billion for the March quarter.
This is level with the unaudited cash NPAT, a result that is flat compared with the quarterly average in the first half of FY25 but up 6 per cent on the March quarter of FY24.
The result was supported by a 1 per cent lift in operating income which was driven by lending volume growth and higher trading income, while the net interest margin remained stable.
“Our balance sheet settings remain strong,” says Comyn.
“Our deliberate and long-term conservative approach to key balance sheet settings enables us to support our customers, the economy and our shareholders through a range of macroeconomic scenarios.”
However, Comyn has warned that the global economy remains at risk due to geopolitical and macroeconomic uncertainty which could slow the Australian economy.
“Australia is in a relatively strong position to navigate the challenges,” he says.
“Australia remains an attractive place to live and work. Government investment in infrastructure and services is helping to support employment and growth, and underlying inflation is moderating.
“We remain focused on supporting our customers, maintaining consistent and disciplined execution, investing in our franchise and generating sustainable returns for our shareholders.”
Despite the rise in corporate loan arrears, CBA boosted the number of business transaction accounts by 7 per cent compared to a year earlier to a total of 1.31 million accounts.
“Business lending continued to grow above system in the quarter, with diversified growth across sectors,” says the bank.
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