Commonwealth Bank of Australia has lifted its third quarter profit by 12 per cent to $1.9 billion.
Australia’s largest home lender said market conditions remained subdued during the three months to March 31, but it managed to grow its loan and deposit portfolios above the banking industry’s average rate.
CBA’s unaudited net profit in the period was up from $1.75 billion in the same period last year.
The bank’s cash profit in the three months to March, which excludes one-off financial items, was also approximately $1.9 billion, up 8.5 per cent on the previous corresponding period.
“Revenue growth continued to reflect a combination of conservative business settings and modest system credit growth,” the bank said in a statement on Wednesday.
“System home loan credit growth remained modest through the March quarter, with the group growing slightly ahead of system.
“Growth in household deposits was also above system.
“Deposit margins remained under pressure in a competitive market.”
Morningstar analyst David Ellis said CBA’s earnings momentum meant higher dividends looked more sustainable.
“Commonwealth Bank of Australia (CBA) continues to deliver earnings of increasing quality and strength … quarterly earnings are in line with our expectation, and our positive view is intact,” Mr Ellis said in a statement.
“Our FY13 cash profit forecast of $7.5 billion needs to be re-assessed with an earnings upgrade likely.
“Importantly, future dividends look increasingly sustainable.
“The brief update highlighted why we like the major banks so much.
“CBA continues to get the basics right, extracting attractive earnings growth from a low credit growth environment – an outcome we have long argued to be very achievable.”
Mr Ellis said the bank’s loan growth continued to be fully-funded from customer deposits, its asset quality remained sound and strong capital levels were supported by good organic capital generation.
He said the CBA’s bad debt expense of $255 million for the quarter represented just 0.19 per cent of total average loans.
At 1049 AEST, CBA shares were up 70 cents, or 0.97 per cent, to $72.79.