Commonwealth Bank $10billion profit as Aussies struggle under rising interest rates
Commonwealth Bank of Australia has posted a statutory full-year net profit of $10.9 billion, a seven per cent rise on the previous year, even as the country's biggest lender warned that economic growth is slowing under the weight of high interest rates and inflation. Chief executive Matt Comyn said the economy remained resilient, backed by low unemployment, but acknowledged household incomes and activity were under uneven pressure, with housing demand cooling after government changes to property tax concessions triggered some of the sharpest monthly house price falls since 2022.
Cash net profit came in at $11 billion, also up seven per cent and beating market expectations, while revenue climbed to $30.2 billion. CBA said it grew at or above the banking sector average across all five of its core business lines for the first time, and declared a final dividend of $2.70, taking the annual total to $5.05, up four per cent. Rival lenders Westpac and NAB reported steep falls in mortgage applications following May's budget changes, and although the Reserve Bank held interest rates for a second consecutive meeting, economists described the move as a "hawkish hold" given signals of possible future rises. CBA shares, trading near $174, carry a price-to-earnings ratio of 28.7, making it, analysts say, the most expensive bank stock in the developed world.
- CBA posts $10.9bn annual profit, up seven per cent year-on-year
- Bank warns growth is slowing under high rates and inflation
- CBA shares now among the world's most expensive bank stocks
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The Commonwealth Bank of Australia, usually called CBA, is the country’s largest bank. It makes money from services such as home loans, savings accounts and business banking, and competes with lenders including Westpac and NAB.
Interest rates affect how much households pay to borrow, especially on mortgages, while inflation raises the cost of everyday goods and services. When both are high, families may have less to spend and demand for homes and loans can weaken, even when unemployment remains low.
CBA’s results matter because the bank is a major part of Australia’s financial system, and its performance reflects activity among borrowers and businesses. Its share price and dividend also matter to investors, while the Reserve Bank’s rate decisions influence borrowing costs across the economy.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Banks benefit disproportionately when interest rates rise, with widening profit margins coming directly at the expense of struggling borrowers facing higher mortgage payments. CBA's record $10.9 billion profit and increased dividend (up 4%) whilst households endure economic hardship suggests the bank is profiting from the very conditions inflicting pain on ordinary Australians. The astronomical P/E ratio of 28.7, the highest for any developed-world bank, indicates the market expects these elevated margins to persist, implying continued pressure on borrowers. Banks bear some responsibility for restraint during economic downturns affecting their customers.
The case against
Banks do not set interest rates; the Reserve Bank does, and CBA's profit growth reflects effective management and competitive strength rather than exploitation. When the RBA raises rates, banks must pass these increases to borrowers whilst also raising deposit rates to retain savers, making higher margins a natural feature of rising-rate cycles. Robust bank profitability is essential to maintain capital strength, manage credit risk during economic slowdowns, invest in customer services, and provide competitive returns to shareholders including pension funds and retail investors. The bank's strong P/E valuation reflects justified confidence in its market position, not a bubble, and CBA cannot solve structural economic challenges created by inflation and RBA policy.