Record cash profit and dividend
Commonwealth Bank of Australia (CBA) reported a record full-year cash profit of A$10.98 billion for the 12 months to 30 June, up 7.1% from A$10.25 billion a year earlier and ahead of the Visible Alpha consensus of A$10.85 billion. Net profit rose 7% to A$10.9 billion. The bank declared a final dividend of A$2.70 per share. Net interest margin was 2.05%, down three basis points on the prior year. The result was supported by 5.8% growth in home lending and a 9.6% rise in business lending year-on-year.
Mortgage application slump
Chief executive Matt Comyn said home loan applications had dropped 15% since the federal budget on 12 May changed tax concessions for property investors, after three interest rate increases took the Reserve Bank of Australia's cash rate to 4.35%. Investor lending applications fell 28% over that period, while owner-occupier applications were down 9%. Application volumes have since stabilised, with the weakest point in late June and early signs of improvement from early August. Total loan application volumes were also 17% lower than a year earlier.
Peers report similar weakness
Rival lenders have flagged comparable declines since the budget changes. Westpac reported a 20% fall in home loan applications since May, while National Australia Bank flagged a 15% slide from the end of March. The "Big Four" banks control about 70% of Australia's A$2.4 trillion mortgage market, and CBA writes roughly a quarter of those loans. Cotality data cited by The Business Times show auction clearance rates at six-year lows and average property prices down about 2% over four months.
Economic warning and asset quality
Comyn told investors and analysts that growth in mortgage offsets had slowed and that economic growth was lagging, citing cost-of-living pressures and the rate environment. CBA forecast mortgage credit growth to settle in a 4–5% range for the year, albeit with volatility. Loan impairment expense rose 9% to A$788 million, attributed to customers facing higher living costs. Plato Investment Management senior portfolio manager Peter Gardner said softer application volumes would constrain bank earnings over the next year or two, while Australian Eagle Asset Management chief investment officer Sean Sequeira questioned whether CBA's valuation, among the highest globally on a forward price-to-earnings basis, could be sustained.
Next milestones
The Reserve Bank of Australia has held the cash rate at 4.35% and not ruled out a further hike, a decision that will shape the trajectory of mortgage demand and the housing market through the second half of 2026.
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