Commonwealth Bank of Australia (ASX: CBA) shares will be on watch on Wednesday.
That's because Australia's largest bank has just released its eagerly anticipated first quarter update.
Let's see what the bank reported for the three months ended 30 September.
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CBA shares on watch following quarterly update
- Operating income up 3.5%
- Operating expenses up 3%
- Unaudited statutory net profit after tax of $2.5 billion
- CET2 ratio up 29 basis points to 11.8%
- Deposit funding ratio of 77%
What happened during the quarter?
For the first quarter of FY 2025, the bank reported a 3.5% increase in operating income. This was driven by one additional day in the quarter, profitable volume growth across core lending and deposit products, and the timing of dividends received from minority investments.
Offsetting some of this was a 3% increase in operating expenses due to wage inflation, increased investment spend, and one additional day in the quarter.
On the bottom line, CBA recorded an unaudited statutory net profit after tax of ~$2.5 billion and an unaudited cash net profit of ~$2.5 billion. The latter was up 5% on the quarterly average during the second half of FY 2024 but flat on the prior comparative quarter.
The good news is that this profit result was in line with the market's expectations, with the consensus estimate sitting pretty at $2.5 billion.
Loan impairment expense was $160 million for the three months, with collective provisions slightly higher. Nevertheless, portfolio credit quality remained sound. Home lending arrears remained stable, with modest improvement in unsecured consumer arrears in line with seasonal trends, and troublesome and impaired assets were marginally higher.
Management commentary
CBA's CEO, Matt Comyn, was pleased with the quarter in a challenging environment. He said:
These results demonstrate ongoing focus on delivering for our customers, and disciplined operational and strategic execution. Many Australians continue to be challenged by cost of living pressures. We have continued to support our customers, invest in our franchise, and provide strength and stability for the broader economy.
Looking ahead, Comyn remains cautiously optimistic on the bank's outlook. He adds:
Inflation is moderating, but at a slowing pace, and global geopolitical tensions are creating uncertainty. Growth in the Australian economy remains slow, as higher rates continue to weigh on consumer demand and bring inflation back to the target range. We remain optimistic on the overall outlook and the Australian economy remains fundamentally sound. We remain focused on supporting our customers, investing for the future, generating sustainable returns for our shareholders, and providing strength and stability for the broader economy to achieve a brighter future for all.
CBA shares are up a whopping 48% since this time last year.
