Commonwealth Bank of Australia (ASX: CBA) shares are under pressure on Wednesday.
In morning trade, the banking giant's shares are down over 8% to $157.16.
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Why are CBA shares crashing?
Investors have been selling the big four bank's shares today following the release of a quarterly update.
For the three months ended 31 March, CBA revealed that operating income was flat on the first-half quarterly average, with higher net interest income offset by lower other operating income.
Net interest income rose 1%, supported by lending and deposit volume growth, earnings on the replicating portfolio, and higher deposit margins. This was partly offset by cash rate lag, competition in home and business lending, the weaker New Zealand dollar, and two fewer days in the quarter.
Operating expenses rose 1%, excluding restructuring and notable items. This was due largely to higher cloud computing volumes, software licensing, and investment in artificial intelligence capabilities.
On the bottom line, the bank reported unaudited statutory net profit after tax of approximately $2.6 billion and unaudited cash net profit after tax of approximately $2.7 billion.
Cash profit was down 1% on the first-half quarterly average but up 4% on the prior corresponding quarter.
Lending and deposits grow
CBA revealed that it continued to grow across key lending and deposit categories.
For the 12 months to March 2026, home loan balances increased by $41 billion, household deposits rose by $38 billion, and business lending grew by $21.6 billion.
The bank noted that business lending grew at 1.2 times system, household deposits at 1.1 times system, and home lending broadly in line with system.
Retail transaction accounts also increased by more than 170,000 during the quarter, mainly driven by new-to-bank account openings.
Provisions increased
One area the market has been watching carefully in this tough economic environment is provisioning.
CBA's loan impairment expense was $316 million for the quarter. The bank increased the forward-looking component of collective provisions by $200 million to reflect heightened geopolitical and macroeconomic risks.
However, management said underlying portfolio credit quality remains sound, with actual losses still low.
Consumer arrears increased modestly, while corporate troublesome and non-performing exposures also moved higher during the quarter.
Management commentary
Commenting on the quarter, CBA's CEO, Matt Comyn, said:
Many Australian households and businesses are navigating cost-of-living pressures from higher energy prices and interest rates. Conflict in the Middle East is disrupting critical supply chains and contributing to global uncertainty. As Australia's largest bank, we are well placed to support our customers through this uncertain environment. Our balance sheet settings remain resilient with strong levels of capital, liquidity, deposit funding and provisioning in the context of economic and geopolitical uncertainty.
Our capital and liquidity ratios remain well above minimum regulatory requirements. Deposit funding represents 79% of total funding, and we are well progressed on our FY26 funding task, having raised A$32 billion in long-term wholesale funding to date. Notwithstanding an already strong level of provisioning, we have chosen to further top up our collective provisions in the quarter to reflect heightened macroeconomic risks. Our deliberate and long-term approach to balance sheet settings enables us to support our customers and the economy.
Speaking about the uncertain outlook, Comyn adds:
We are closely monitoring the impacts of the Middle East conflict and the broader macroeconomic environment. The Australian economy continues to demonstrate resilience, but supply chain disruptions, higher prices and interest rates are expected to weigh on household spending and business activity. We will continue to adjust our settings as appropriate and remain focused on executing our strategy to build a brighter future for all.
