Commonwealth Bank boss Matt Comyn has performed down fears of a home worth bubble fuelled by low rates of interest, saying the market’s progress is completely different to the surges of about 4 years in the past.
Comyn was discussing the financial outlook with media after the financial institution on Wednesday reported a money revenue of $three.8bn for the primary six months of 2020/21.
This was down 10.eight% from the earlier corresponding interval. The housing market, thriving from low charges, shall be a think about enhancing earnings.
The financial institution’s economists have forecast property costs will rise by eight% (annual progress) this calendar yr, spurred by low charges.
But Comyn was not nervous about property costs rocketing to harmful ranges. He stated he took consolation from the composition of the market’s progress.
“There’s rather more distribution throughout regional areas than CBDs,” he stated.
The most important worth rises had been in Darwin, Perth and Canberra.
Comyn additionally famous owner-occupiers and first homebuyers had been predominantly driving gross sales.
“In the mean time it’s very sturdy for owner-occupiers and first homebuyers,” he stated.
Buyers accounted for about 23% of gross sales. They’d accounted for about 40% of gross sales in the course of the housing worth increase of 4 to 5 years in the past, Comyn stated.
He stated workers would this yr be monitoring whether or not traders took a bigger share of gross sales.
Comyn was upbeat in regards to the financial institution’s prospects within the second half of the monetary yr, and cited a lift to the financial system from federal authorities stimulus measures.
“Though the outlook is optimistic, there are a variety of well being and financial dangers that might dampen the tempo of restoration,” he added, alluding to potential hiccups within the rollout of coronavirus vaccines.
“We’re ready for a variety of situations and have taken a cautious method to provisioning.”
The financial institution had a statutory bottom-line results of $four.9bn internet revenue, down 20.eight%.
CBA’s internet curiosity margin – the revenue it makes on loans – contracted by 10 foundation factors to round 2% within the first half, reflecting the affect of traditionally low lending charges.
On the identical time, the funds it put apart to cowl dangerous loans elevated by $233m to $882m. This was a giant enchancment on the $1.9bn booked within the second half of fiscal 2020.
“Arrears on house loans and shopper finance stay low, and are being quickly insulated by Covid-19 help measures,” CBA’s earnings report stated.
However the financial institution famous it was nonetheless seeing company mortgage vulnerability within the aviation, leisure and leisure and tourism sectors – all hit arduous by the pandemic.
CBA pays its traders an interim dividend of $1.50 per share.
The payout was higher than UBS analysts’ expectation of $1.43 per share.