(Reuters) – Commonwealth Bank of Australia reported a 23% jump in half-year cash profit on Wednesday on the back of higher lending, but the bank signalled that intense competition was eating into its margins.
The margin warning follows similar ones from rivals such as Westpac and underlines how the banks’ bid to protect market share by offering more attractive home loan rates is hitting profits.
The pressure has also been worsened by a customer shift towards fixed-rate loans, which tend to be priced lower than variable rates.
“Looking ahead, we expect home loan price competition and switching to continue to weigh on margins in the second half,” CBA, Australia’s largest lender, said in a statement.
The bank reported a net interest margin of 1.92%, lower than the 2.06% it reported a year ago and 17 basis points below the second half of fiscal 2021.
Cash profit climbed to A$4.75 billion ($3.39 billion) in the six months ended Dec. 31, from A$3.87 billion a year ago, beating an average estimate of A$4.35 billion from four brokerages.
It declared an interim dividend of A$1.75 per share, higher than the A$1.5 a share it paid to shareholders a year earlier.
($1 = 1.4002 Australian dollars)
(Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Aditya Soni)
