CBA lifts first-quarter cash profit but margins narrow

The news: Australia’s biggest lender, Commonwealth Bank has lifted its first quarter cash profit but said margins had narrowed in a competitive market.

The numbers: Unaudited cash profit for the three months to 30 September rose 1% from a year ago to $2.5 billion. Statutory net profit was unchanged at $2.5 billion while operating income was also flat.

The context: CBA said lower net interest margins due to competitive pressures and a 3% increase in operating expenses because of higher staff costs meant operating performance in the quarter was largely flat compared to the average of the second half of the last fiscal. It reported an 11.2% jump in business lending, while home loans were up 3.1% from a year ago. CBA chief executive Matt Comyn said he remained optimistic on the medium-term outlook as the economy remains resilient, but he added that higher interest rates are resulting in slowing growth and consumer spending.