Commonwealth Bank is on track for an annual profit in excess of $8 billion after lifting its earnings 14 per cent in the first three months of the financial year.

Australia’s largest home lender recorded cash earnings of $2.1 billion in the three months to the end of September, up from $1.85 billion during the same period last year..

Shares in CBA, the largest company on the Australia share market, hit another all time high on the strong profit growth, taking the company’s value above $124 billion.

The first quarter result put the bank on track for a record full year cash profit of $8.25 billion, Morningstar analyst David Ellis said, up from $7.8 billion in the 2012/13 year.

“Despite slightly lower margins we consider the major banks’ ability to reprice loans remains intact, underpinning their competitive strengths,” he said.

“CBA remains well capitalised, with strong liquidity levels and funding positions.”

In its quarterly trading update, CBA said a combination of solid revenue growth and cost discipline contributed to higher earnings.

But the bank’s net interest margin fell during the quarter as a result of the lower interest rate environment.

Net interest margin is a measure of the profit made from interest earned from loans.

Lower interest rates helped spur growth in new business activity compared to a year ago, though total credit growth was modest due to higher levels of loan repayments.

CBA said household deposit growth was strong during the quarter, while stock market gains provided a boost for the bank’s wealth management business.

Meanwhile, insurance premiums increased two per cent during the quarter.

CBA shares added 96 cents to $77.96, after earlier hitting an all time high of $78.40.