Commonwealth Bank of Australia 1Q Profit Rises

MELBOURNE, Australia--Commonwealth Bank of Australia (CBA.AU) said its first-quarter profit rose as home lending increased and soured loans shrank.

The country's largest bank by market value and the biggest mortgage lender on Wednesday reported an unaudited net profit of around 2.80 billion Australian dollars (US$2.14 billion) for the three months through September. That compares with a profit of about A$2.4 billion reported a year earlier.

Cash earnings--a measure followed by analysts that strips out one-time items, treasury shares and hedge-value changes--rose by 6% to about A$2.65 billion.

The bank said the credit quality of its lending portfolios remained sound, with consumer arrears falling compared to the previous three months. The loan-impairment expense for the quarter was A$198 million, or about 11 basis points of gross loans and acceptances.

Operating income rose by 4%, while expenses for the period also increased 4%, Commonwealth Bank said.

The bank's net interest margin, a profit measure based on the difference between the rate at which a bank borrows and lends, improved in the first quarter. That was driven by asset repricing and reduced liquid asset balances, although it was partly offset by the impact of a banking levy, higher funding costs and competition, CBA said.

Over the past fiscal year, Australia's four biggest banks collectively recorded a 6.3% increase in cash earnings to A$31.5 billion, helped by a 23% drop in bad-debt expenses to A$3.97 billion, accountancy firm Ernst & Young calculated. However, the average net interest margin contracted an average 0.045 percentage point to 2.01%.

The fiscal year for Australia & New Zealand Banking Group Ltd. (ANZ.AU), National Australia Bank Ltd. (NAB.AU) and Westpac Banking Corp. (WBC.AU) runs through September.

-Write to Robb M. Stewart at

(END) Dow Jones Newswires

November 07, 2017 16:48 ET (21:48 GMT)