CBA results: Mortgage boom fuels Commonwealth Bank’s monster first-half profit

Commonwealth Bank of Australia’s remains upbeat on the prospects for the national economy but has echoed fears from the Reserve Bank that inflation will remain elevated for the foreseeable future.

Chief executive Matt Comyn said economic growth had strengthened in the last half of 2025, driven by increases in consumer demand and rising investment in AI and energy infrastructure.

But supply-side constraints meant the economy was struggling to keep pace with the increased demand.

“As a result, inflation is now expected to remain above the Reserve Bank’s target band for some time, placing further upward pressure on interest rates,” Mr Comyn said.

“We will continue to seek to support our customers with their financial resilience. We are optimistic about the prospects for the economy and will play our part in building a brighter future for all.”

Mr Comyn said a strong labour market and three rate cuts in 2025 had provided some relief for borrowers, with mortgage arrears dropping 7 basis points in the first-half of the financial year and 87 per cent of home loan customers now ahead on their repayments.

“While conditions remain challenging for some customers, recent improvements in economic activity reinforce the resilience of the Australian economy,” he said.

His comments came as CBA’s first-half profit topped estimates, buoyed by growth in its flagship mortgage business and a push in business lending.

Results released on Wednesday showed cash profit from continuing operations came in at $5.45 billion in the six months to the end of December — beating by a wide margin analyst estimates of about $5.18b.

CBA will pay an interim dividend of $2.35 a share, maintaining a dividend payout ratio of around 74 per cent.

Shares of the country’s largest lender are down more than 15 per cent from a record high in June amid concerns that valuations became too stretched. Australian banks are contending with a dip in consumer sentiment after the RBA last week became the first major monetary authority to hike its key interest rate to control inflation.

The bank’s net interest margin dipped 4 basis points to 2.04 per cent as lenders fight for mortgage business, as well as lower income from treasury and markets.

Expenses climbed 5 per cent to $6.7b, driven by inflation and increased investment in technology. CBA is pushing spending in its tech infrastructure to develop its generative AI capabilities and increase cyber-security defences.

CBA’s business lending division has been growing faster than the industry in this area as the lender seeks to win market share from rivals including National Australia Bank.

Meantime, its flagship home lending division — the firm’s biggest — saw retail transaction accounts continue to grow, with more than 79,000 home loans approved in the six-month period.

“We continue to watch the competitive intensity and its implications across the financial system,” Mr Comyn said. “We are well placed to compete effectively and will continue to adjust our settings as appropriate.”

On Tuesday, Macquarie Group signalled it expected higher income in its key commodities and global markets business after reporting strong performance in asset management.