CHART: The Commonwealth Bank's bad loans suddenly jumped

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Bad loans jumped substantially higher in the second half of the 2016 financial year at the Commonwealth Bank.

There were two pain points: home loan arrears, mainly in the mining towns of Western Australia and Queensland; and rural New Zealand where the dairy sector is feeling the fallout from a global milk glut.

Here’s how the December half looked compared to the six months to June:

Source: CBA

Loan impairment expenses increased 23% on the prior half to $692 million. For the year, they were up 27% to $1.256 billion.

Here’s the breakdown by operating division for the year:

The big four banks have a $3 billion collective exposure to recent corporate collapses.

At the Commonwealth Bank, loan impairment expenses for Institutional Banking and Markets were up more than 50% to $252 million.

Among the exposures for the Commonwealth is about $220 million at Arrium, the iron ore miner and steel producer which went into voluntary administration in April, a victim of falling iron ore prices and a steel glut caused by overproduction in China.

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