The Commonwealth Bank of Australia (ASX: CBA) share price is edging higher on Wednesday morning.
At the time of writing, the banking giant's shares are up almost 1% to $167.42.
This follows the release of the bank's third quarter update this morning.
CBA share price higher on results day
For the three months ended 31 March, CBA's operating income was up 1% for the quarter driven by lending volume growth and higher trading income, largely offset by two less days in the quarter.
Management notes that disciplined volume growth was delivered across home lending and household deposits in the quarter. Its Retail Bank transaction accounts increased by ~150,000 in the quarter driven by continued non-migrant and migrant account openings.
Home loans grew $6 billion at 0.9x system for the three months and household deposits grew $4.9 billion in the quarter. CBA also continued to focus on growing its Business Bank franchise in the quarter. It increased business transaction accounts by 7% versus the prior comparative period to ~1.31 million accounts. This led to Business lending continuing to grow above system in the quarter, with diversified growth across sectors.
Excluding non-recurring earnings, CBA's net interest margin was stable. Whereas operating expenses were up 1% driven by increased investment in technology and frontline staff. This was partly offset by two less days in the quarter and the benefit of ongoing productivity initiatives.
Nevertheless, CBA reported an unaudited cash net profit after tax of ~$2.6 billion for the quarter, which is flat on the first half quarterly average but up 6% on the prior comparative quarter.
CBA finished the period with a strong balance sheet. It had a customer deposit funding ratio of 77%, LCR of 133%, and NSFR of 116%.
Loan impairment expense was $223 million, with collective and individual provisions slightly higher. However, portfolio credit quality has remained sound despite increases in consumer arrears and corporate troublesome and non-performing exposures.
Management commentary
CBA's CEO, Matt Comyn, was pleased with the three months. He said:
Our balance sheet settings remain strong. We have maintained strong capital and provisioning levels, and have successfully completed our FY25 funding task during the March quarter. Our deliberate and long-term conservative approach to key balance sheet settings enables us to support our customers, the economy and our shareholders through a range of macroeconomic scenarios.
Comyn is cautiously optimistic about the bank's outlook despite geopolitical and macroeconomic uncertainty. He adds:
There is heightened risk to the global economy from geopolitical and macroeconomic uncertainty which could slow the domestic economy. Australia is in a relatively strong position to navigate the challenges. Australia remains an attractive place to live and work. Government investment in infrastructure and services is helping to support employment and growth, and underlying inflation is moderating. We remain focused on supporting our customers, maintaining consistent and disciplined execution, investing in our franchise and generating sustainable returns for our shareholders.
