CBA cautions against housing investor resurgence


“At least to date, investors have only had a modest participation overall in the housing market recovery and I think that’s one of the key indicators that we will look to over the course of the calendar year, what proportion of investors are coming into the market,” he told journalists.

Housing credit is growing at about 3 per cent, and Mr Comyn said that if credit growth lifted to about 4 per cent that would still be “sustainable.”

“If we saw an acceleration in credit growth and house prices, clearly that has issues for individuals who are looking to enter the housing market, but in the context of broader financial stability, if we were starting to see that accelerate that would certainly give us broader cause for concern,” he said.

Highlights of CBA’s result were its performance in the mortgage market, where it notched up mortgage growth 1.5 times faster than the market, and the strength of its profit margins. Its net interest margin, which compares funding costs with what it charges for loans, was 2.11 per cent, 1 basis point wider than in the six months to June.


CBA kept its interim dividend flat at $2 a share, which will be fully-franked and paid on March 31. Analysts predict CBA will launch a share buyback at a later date, and with tier one capital of 11.7 per cent of risk-weighted assets.

Angus Gluskie, managing director of CBA shareholder White Funds Management, said investors were getting more “comfortable” with the stock, citing its revenue growth, resilient margins, lower loan arrears, and strong capital position.

“Within that CBA result there are positives across a number of different dimensions which read quite favourably about the banking outlook going forward,” he said.

Despite the sharemarket’s reaction, Mr Comyn said its margins would still be dragged down in future halves as low interest rates affected the bank. “There’s no escaping that low interest rates have a big impact on net interest margins and profits for financial institutions,” he said in an interview with The Sydney Morning Herald and The Age.

Macquarie analyst Victor German said CBA’s performance was “respectable,” though he also expected its profit margins would deteriorate in the second half of the year.

In a sign of the impact of the bushfires, CBA took a $100 million provision for exposure to the bushfires and the drought, as well as $83 million in bushfire-related insurance claims.

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