CBA (ASX:CBA) posts steady Q3 cash profit; how are shares reacting?

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Highlights

  • CBA’s Q3 cash profit was flat compared to its first-half quarterly average.

  • CBA’s operating income declined 1% to AU$6.1 billion.

  • The bank said that higher non-interest income helped it to offset continued margin pressure.


Commonwealth Bank of Australia (ASX:CBA) on Thursday reported a AU$2.4 billion cash profit for the three months ending 31 March despite a fall in operating income. The lender’s cash profit was flat compared to first-half quarterly average, CBA said in its March quarter update. Australia’s largest bank delivered a profit in the third quarter despite operating income declining 1% to AU$6.1 billion, indicating “continued margin pressure” on the business.

By 10:05 AM (AEST), the stock was trading at AU$101.21, down 0.30%. On a year-to-date (YTD) basis, the stock is down nearly 1%.

CBA said that higher non-interest income helped it to offset continued margin pressure from elevated swap rates, mix effects and competition during the period under review.

The bank boosted home lending by 8.5%, household deposits by 13.5%, business lending by 12.6% and business deposits by 13.5% compared to the March quarter of 2021.

The Australian bank also announced a 2% fall in expenses excluding remediation costs. The bank held a CET1 ratio of 11.1% for the period after its previously announced AU$3 billion interim dividend payments in the first half of the financial year 2022.

Earlier, CBA had also announced an on-market share buyback of up to $2 billion, which would be conducted across the remainder of 2022.

What did the CBA’s management say?

Commenting on the results, Matt Comyn, Chief Executive Officer (CEO) of CBA, said the quarter reflected its focus on its core banking franchises.

“The March quarter underlined the disciplined execution of the Group’s strategy, focused on our core banking franchises, which delivered continued volume growth, sound portfolio credit quality and ongoing support for our customers and communities, in particular to those most affected by extreme weather events in many parts of the country including the catastrophic East Coast floods and WA bushfires,” Comyn said.

Comyn also highlighted that the quarter was marked by “continued growth in household deposits, home loans, business lending and business deposits”. The Group held on to strong balance sheet settings and paid AU$3 billion in half-year dividends to shareholders, he added.

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