“Maybe the rest of the banks are not as bad as they were a few years ago and maybe investors are rotating [away from CBA],” Wilson said.
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UBS analyst Jon Storey said quarterly results had been unpredictable, but the headline figures on Tuesday suggested CBA was on track for first-half profits “broadly in line with expectations”.
Storey said a 6.1 per cent increase in costs was “somewhat surprising,” as was a decline in CBA’s capital ratio. He noted CBA shares had outperformed Westpac and NAB over the past month. “Given the current valuation, it would appear perfection is implicitly expected,” Storey said.
Ten Cap co-founder and portfolio manager Jun Bei Liu said Tuesday’s share price reaction appeared to be “overdone,” but it was a function of CBA’s high valuation.
“It’s very expensive relative to other banks. Investors are less forgiving,” she said.
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In his comments on competition in the market, Comyn noted that CBA rivals had all said they wanted to write more business through their own bankers, instead of through mortgage brokers. Macquarie, in contrast, writes almost all of its loans via mortgage brokers, though it is also focused on more established borrowers with substantial equity in their homes. Banks are also focused on business clients, who are often relatively well off.
The trading update showed CBA’s cash profits in its first quarter rose 2 per cent to $2.6 billion, with the banking giant reporting stronger momentum in its massive mortgage and deposit portfolios, alongside growth in business banking.
CBA said it had grown its home loan book by $9.3 billion in the quarter, slightly more than the industry average, while it hoovered up an extra $17.8 billion in household deposits – also faster growth than the market average.
The bank said its charges for bad loans were broadly flat, with lower consumer arrears and lower charges for troubled business corporate loans.
The bank’s underlying margin – which measures funding costs compared with what it charges for loans – was “slightly lower” as a result of customers switching to higher-interest deposits, competition and the lower interest rate environment.
Comyn said cost of living pressures were challenging for many customers, but households and businesses had felt some relief from the decline in interest rates this year. After the recent jump in inflation, Comyn said he thought interest rates were on hold for now, with more information on the December quarter inflation data due in late January.
“We always thought it was going to be a relatively shallow rate-cutting cycle, but it’s certainly possible that rates are on hold for an extended period now,” he said, adding the RBA would be driven by economic data.
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