CBA boss has no fear of house price bubble

Commonwealth Bank boss Matt Comyn has downplayed fears that house prices may skyrocket from low interest rates, saying the market's growth was different to the surges of about four years ago.

Mr Comyn was discussing the economic outlook with media after the bank on Wednesday reported a cash profit of $3.8 billion for the first six months of 2020/21.

This was down 10.8 per cent from the previous corresponding period.

The housing market, thriving from low rates, will be a factor in improving earnings.

The bank's economists have forecast property prices will rise by eight per cent (annual growth) this calendar year, spurred by low rates.

Yet Mr Comyn was not worried about property prices rocketing to dangerous levels.

He said he took comfort from the composition of the market's growth.

"There is much more distribution across regional areas than CBDs," he said.

The biggest price rises were in Darwin, Perth and Canberra.

Mr Comyn also noted owner-occupiers and first home buyers were predominantly driving sales.

"At the moment it's very strong for owner-occupiers and first home buyers," he said.

Investors accounted for about 23 per cent of sales. They had accounted for about 40 per cent of sales during the housing price boom of four to five years ago, Mr Comyn said.

He said staff would this year be monitoring whether investors took a larger share of sales.

Mr Comyn was upbeat about the bank's prospects in the second half of the financial year, and cited a boost to the economy from federal government stimulus measures.

"Although the outlook is positive, there are a number of health and economic risks that could dampen the pace of recovery," he added, alluding to possible hiccups in the rollout of coronavirus vaccines.

"We are prepared for a range of scenarios and have taken a careful approach to provisioning."

The bank had a statutory bottom-line result of $4.9 billion net profit, down 20.8 per cent.

CBA's net interest margin - the profit it makes on loans - contracted by 10 basis points to around two per cent in the first half, reflecting the impact of historically low lending rates.

At the same time, the funds it put aside to cover bad loans increased by $233 million to $882 million. This was a big improvement on the $1.9 billion booked in the second half of fiscal 2020.

"Arrears on home loans and consumer finance remain low, and are being temporarily insulated by COVID-19 support measures," CBA's earnings report said.

But the bank noted it was still seeing corporate loan vulnerability in the aviation, entertainment and leisure and tourism sectors - all hit hard by the pandemic.

CBA will pay its investors an interim dividend of $1.50 per share.

The payout was better than UBS analysts' expectation of $1.43 per share.

Shares were down 1.58 per cent to $86.04 at 1509 AEDT.

Austrlaian Associated PressBack to Breaking News

  • Print this page
  • Copy Link