CBA Accelerates Interest Income as Lending Broadens
Net interest income increased 7% as average interest-earning assets grew by A$92 billion.
Commonwealth Bank of Australia (CBA), the country’s largest bank by assets, increased net interest income 7% in fiscal 2026, accelerating from 5% growth a year earlier as average interest-earning assets rose 8%, or A$92 billion.
The larger balance sheet offset pressure on spreads. Group net interest margin compressed 3 bps to 2.05%, reversing the prior year’s 9-basis-point expansion. Underlying NIM, excluding liquid assets and institutional facilities, was stable as hedges and favorable business-lending and deposit mix countered lower lending margins and competition.
Growth broadened across the loan book. Home lending increased 7.0%, up from 6.1% in fiscal 2025, while business lending accelerated to 11.5% from 2.5%. Business deposits grew 13.8%, compared with 12.2% a year earlier, while household-deposit growth slowed to 7.9% from 9.1%.
Business Banking supplied the clearest segment lift, with cash profit rising 11% to A$4.544 billion and NIM expanding 7 bps to 3.39%. Retail Banking Services cash profit increased 5% to A$5.587 billion, while Institutional Banking and Markets gained 2% and New Zealand declined 7%.
Other operating income increased 4%, accelerating from 2% growth in fiscal 2025, as insurance income, one-off gains and equities volumes outweighed declines in several transaction and financing revenue lines. Expenses rose 6% to A$13.755 billion, though revenue growth lowered the cost-to-income ratio by 20 bps to 45.5%.
CBA finished June with an APRA Common Equity Tier 1 ratio of 12.0%, down 30 bps as commercial and residential-mortgage growth absorbed capital. The bank ended its A$1 billion on-market buyback after completing A$300 million, while lifting its fully franked dividend 4% to A$5.05 a share and reducing the cash payout ratio to 77%.
Credit costs moved higher as household pressure persisted. Loan impairment expense rose 9% to A$788 million and the loan-loss rate increased 1 bp to 8 bps, while home-loan and personal-loan arrears reached 0.73% and 1.72%, respectively. Gross nonperforming exposures improved 4 bps to 0.69%, and the buffer above central-scenario expected losses increased to A$2.7 billion, leaving CBA with additional reserves as balance-sheet growth and cost-of-living pressure carried into the new fiscal year.