Commonwealth Bank of Australia H1 Earnings Call Highlights

Commonwealth Bank of Australia (ASX:CBA) reported higher earnings for the half-year ended 31 December 2025, pointing to disciplined balance sheet growth, stable underlying margins, and benign credit conditions amid elevated competition across the Australian banking sector.

Profit, dividend, and operating trends

Chief Executive Officer Matt Comyn said cash net profit increased 6% on the prior corresponding period, while earnings per share rose by AUD 0.19. The board declared a fully franked interim dividend of AUD 2.35 per share, up AUD 0.10 on the prior corresponding period. Management noted this marked the 11th consecutive period of dividend reinvestment plan (DRP) neutralisation.

Chief Financial Officer Alan Docherty said both statutory and cash profits from continuing operations were “around AUD 5.4 billion,” with only modest movements in non-cash items. Operating income rose 6.6% year-on-year, while underlying operating expenses increased 5.5% excluding restructuring and notable items. Notable expense items totaled AUD 170 million over the six months, largely due to the settlement of a long-standing legal proceeding in New Zealand during the September quarter.

Margin and funding: stable underlying NIM, deposit-led balance sheet

Docherty said the net interest margin fell 4 basis points over the half, primarily due to an increased mix of low-margin liquid assets and institutional repos. Excluding those items, margins were 1 basis point lower, with competition and the impact of a lower cash rate largely offset by benefits from the replicating portfolio and favorable portfolio mix from strong deposit growth.

In response to analyst questions, Docherty said margins were stronger in the December quarter, citing higher swap rates affecting the replicating portfolio and a smaller cash-rate headwind versus the prior quarter. He also pointed to particularly strong growth in business transaction accounts in the December quarter, which contributed a mix benefit.

Management emphasized deposit gathering as a core feature of the franchise. The bank’s balance sheet remained 79% deposit-funded, with customer deposits growing at an annualized rate of 10% over the last six months. Comyn described record deposit inflows in the half, and highlighted a AUD 15 billion increase in redraw balances and offset accounts. He added that 87% of home loan customers were ahead of scheduled repayments, averaging 35 payments in advance.

During Q&A, executives said retail savings growth continued to skew toward higher-rate products, particularly Gold Saver. Docherty said a large share of balances in that product were earning the bonus rate, and that the mix shift was a consistent headwind to deposit margins across both quarters of the half.

Segment performance: retail, business, institutional and New Zealand

Comyn said the bank maintained stable margins while growing volumes at or above system across major segments. Over the past 12 months, mortgage balances increased by AUD 45 billion, or 7%, and business lending grew 12%. In the half, deposit balances increased by AUD 44 billion, which management described as the strongest half-year of domestic deposit and lending balance growth since 2008.

• Retail bank: Pre-provision profit grew 5%. Comyn said the retail bank held the leading Net Promoter Score for 38 consecutive months. Home loan balances increased 7% year-on-year to AUD 622 billion, with 97% of those customers holding a transaction account with the bank. He said 70% of proprietary home loan applications were auto-decisioned on the same day. Customer engagement metrics included 9.4 million CommBank app users and 14 million daily logins. The bank reported 12 million retail transaction accounts, up 35% since the start of COVID and up 585,000 in the past year.
• Business bank: Pre-provision profit rose 8% and cash profit increased 14%. Management said market share (MFI) increased to 26.9%, up 310 basis points since the start of COVID. The business bank added 85,000 transaction accounts in the past year (7% increase) and became the group’s largest source of transactional deposits. Lending balances rose AUD 18 billion over the year (1.3x system), and loan losses were six basis points in the half. Comyn also pointed to process automation and growth in BizExpress auto-approvals, and said the bank launched a national AI, cybersecurity, and digital capability initiative aimed at supporting up to 1 million small businesses.
• Institutional bank: Pre-provision profit increased 13%, and the bank said it regained the number one position in NPS. Comyn cited AUD 64 billion in net deposit balances and growth in transaction banking mandates. The markets business delivered what management called a “particularly strong half,” and Comyn said the bank led the market in debt capital markets performance and topped the Bloomberg Combined Lead table last year.
• New Zealand (ASB): Operating income grew 8%. Management said ASB delivered 1.3x system growth in home lending and business and rural lending, with deposits at 1.2x system. Customer deposits and home lending balances were both up 41% over the last six years.

Credit quality and provisioning remain conservative

Credit conditions were described as “very benign.” Comyn said troublesome and non-performing exposures decreased, and the number of home loan customers in hardship declined 28% since June 2024. Total provisions were AUD 6.3 billion, which he said was AUD 2.8 billion above the bank’s central economic scenario.

Docherty reported loan impairment expense of AUD 319 million, broadly consistent with the prior corresponding period and lower than the second half of last year. He said the bank marginally reduced base provisioning and forward-looking adjustments in areas where conditions improved, including consumer, construction, and retail trade, partly offset by increased provisioning tied to downside scenarios reflecting the risk of exogenous shocks.

Outlook: resilient growth, inflation pressures, and ongoing competition

Comyn said Australian economic growth strengthened more quickly than expected, supported by consumer demand and investment in AI and energy infrastructure, but supply-side constraints were contributing to inflation that is expected to remain above the Reserve Bank’s target band for some time. He noted the Reserve Bank raised interest rates to 3.85% in response to inflation, and management discussed the likelihood that higher rates could moderate system credit growth over time.

Executives also repeatedly pointed to intense competition in both lending and deposits, and discussed how differences in business models, regulatory settings, and return hurdles were influencing pricing discipline across the market. Management said it would continue to balance volume and margin, invest in technology and resilience (including fraud and scam prevention), and maintain conservative capital and liquidity settings. The bank’s common equity tier one ratio was 12.3%, which Comyn said was around AUD 10 billion above minimum regulatory requirements.

About Commonwealth Bank of Australia (ASX:CBA)

Commonwealth Bank of Australia provides financial services in Australia, New Zealand, and internationally. It operates through Retail Banking Services, Business Banking, Institutional Banking and Markets, and New Zealand segments. The company offers transaction, savings, and foreign currency accounts; term deposits; personal and business loans; overdrafts; equipment finance; credit cards; international payment and trade; and private banking services, as well as home and car loans. It also provides institutional banking services; funds management, superannuation, and share broking products and services; home, car, health, life, income protection, and travel insurance products, as well as retail, premium, business, offshore services.