CBA’s better-than-expected home loan growth could mean stronger profits

CBA. Picture: Getty Images

Commonwealth Bank of Australia, the nation’s largest lender, posted a 6.7% growth in mortgages in its first half adding market share and this could potentially boost the lender’s profit, Morgan Stanley said.

CBA’s home loan growth in the six months to December 31 was 1 percentage point higher than that expected by Morgan Stanley and compares with a 6.5% growth for all lenders put together. The bank’s outperformance could add 0.5% to Morgan Stanley’s half year and full-year earnings for CBA, it said.

The bigger “swing factor” though would be re-pricing of lending rates and competition, it said.

This first chart shows the rate of home growth at CBA over the past two years


And this shows the mortgage growth across the sector


CBA, which holds one in every four outstanding Australian mortgages, is scheduled to report half year earnings on February 15 and annual results on August 10. Morgan Stanley estimates the bank’s full-year profit to reach $9.9 billion from $9.5 billion a year earlier.