CBA continues to reduce its exposure to interest-only home loans

CBA continues to reduce its exposure to interest-only home loans
CBA continues to reduce its exposure to interest-only home loans

Commonwealth Bank, the nation's biggest home lender, continues to cut its exposure to interest-only loans.

In June 2018, 30% of their loan book was made up of interest only loans. By December 2018 it was 26% and now it is 22%.

Home loans arrears only nudged 0.01% higher to 0.68% from December to June.

The percentage of home loans in negative equity has jumped from 3.3% in June last year to 4.5%.

CBA chief executive Comyn says overall they feel like the housing market is starting to stabilise and may slightly improve from here.

"We see modest price increases and a modest increase in credit growth overall.

"We also believe that unemployment is likely to stay low.

"Clearly as we look forward, making sure there’s some sort of increase in household income, and of course, an increase in sentiment for both consumers and businesses, is going to be very important in the future economic period."

CBA continues to reduce its exposure to interest-only home loans

CBA announced profits of $8.5 billion in their full year 2019 results, down 4.7 percent from the year before.

Matt Comyn said the decline was driven by an extra $1 billion in remediation given out over the year, as well as "elevated risk and compliance spend."

He suggests however the company's core franchise is continuing to perform "very well."

"The key takeaways from my perspective are we’re making very good progress on becoming a simpler and better bank," Comyn said.

"Our home lending balances are up 4% which is above the system.

"Our business lending is also up 4% and we’ve continued to see strong transaction deposit growth of 9% for the year.

"Our overall result of $8.5 billion is down 4.7%. So that cash net profit after tax is of course subdued and it’s been impacted by higher remediation costs of almost $1 billion during the course of the year, as well as elevated risk and compliance spend."

Joel Robinson

Joel Robinson

Joel Robinson is a property journalist based in Sydney. Joel has been writing about the residential real estate market for the last five years, specializing in market trends and the economics and finance behind buying and selling real estate.

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Financial Results Commonwealth Bank

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