CBA’s late mortgage payments tick up as interest rate rises bite

Résumé détaillé

CBA attributed the higher home loan arrears to cost of living pressures from higher interest rates and inflation. In total though, the bank’s provisions for bad loans were flat at…

More Australians are struggling with their mortgage repayments as interest rates rise and inflation stays high, the nation’s largest bank has reported in an earnings release that also came with almost $3 billion in profit.

In a trading update issued on Wednesday, the Commonwealth Bank said it recorded a seven-basis-point increase in home loans with payments more than 90 days overdue, taking the rate of overdue loans in its books to 0.80 per cent.

The update covers the quarter that ended on September 30 and showed the bank made $2.8 billion in profit, with operating income up 3 per cent but expenses up by the same amount. That profit figure was flat on preceding quarters but up 8 per cent on the same period in the last financial year.

The market sent CBA shares down 1.21 per cent to $166.94 on Wednesday while the overall ASX200 index rose.

CBA attributed the higher home loan arrears to cost-of-living pressures from higher interest rates and inflation. It made a $105 million provision to guard against any issues in its loan book, though actual losses for the bank from failed loans – which are a lagging indicator – remain below pre-pandemic levels.

In total, the bank’s provisions for bad loans were flat at $6.5 billion as other types of loans performed well, which CBA said gave it “strong” coverage for any issues.

Earlier this week, ANZ reported a similar increase in the number of customers struggling to repay home loans, taking the percentage of loans in its book that were more than 90 days overdue to 0.95 per cent.

The Reserve Bank of Australia increased the cash rate to an 18-year-high on November 3 in its fifth hike this year. Those increases, which are designed to curb inflation, have added hundreds of dollars a month in interest payments to an average Australian mortgage.

“It is going to make people feel like it’s a recession because they feel poorer,” RBA governor Michele Bullock said at the time.

Début de l'article, extrait de The Sydney Morning Herald. Pour lire la suite, ouvrez l'article chez le média.