Commonwealth Bank Reports Record Profit Amid Housing Market Boom
Commonwealth Bank has announced an impressive half-year cash profit of $5.45 billion, driven by a surge of investors entering the housing market, which has shifted market share away from owner-occupiers.
The bank, Australia’s largest, revealed on Wednesday that property prices in many regions are at or near historic highs, and it’s processing more than 3,000 mortgage applications weekly on average.
Residential investment lending has seen a notable spike, with investors making up 43% of new lending agreements, a rise from 37% just two years ago, based on CBA’s data. Conversely, loans to owner-occupiers have declined as a proportion of total outstanding loans.
Investors who already hold equity in their properties are often prevailing in bidding wars against first-time buyers in competitive markets. This dynamic, it seems, is exacerbating the wealth divide and creating some friction between generations.
Following the release of its six-month results, CBA shares leapt more than 7%, reflecting strong performance in both residential and business lending, much to the delight of traders.
In a call with investors, CEO Matt Kamin noted that mortgage balances have risen 7% over the past year to $622 billion, and a striking 97% of these clients also possess a trading account with CBA.
Year-on-year, CBA’s cash profit grew by 6%, surpassing forecasts. The bank announced an interim dividend of $2.35, which marks a 10-cent increase from the previous year.
Encouragingly, the bank has reported a decrease in mortgage payment delinquencies, attributed to three recent interest rate cuts and tax relief that have alleviated some strains on household finances.
However, there are still rising delinquency rates, and mortgages have yet to reflect the consequences of last week’s interest rate increase.
These substantial profits have drawn criticism from financial unions, which are voicing concerns over increased workloads for bank employees and the growing inclination towards automation.
A survey involving over 1,700 CBA employees indicated that 72% expressed worries about their job security, primarily linked to the swift rise of offshoring and the integration of AI technologies.
RBA Overlooked Lending Surge
CBA’s uptick in investment lending mirrors a broader national trend, as banks seek to attract what Westpac refers to as “attractive” customers.
According to the Australian Bureau of Statistics, investors represented two in five of the mortgages issued during the last quarter of 2025, with a record high of 60,445 loans totaling nearly $43 billion.
This figure surpasses the 57,282 loans made available to existing owner-occupiers and nearly doubles the 31,783 first home buyer loans, bolstered by the government’s 5% deposit initiative.
RBA Deputy Governor Andrew Hauser mentioned on Wednesday that lending had outpaced the Reserve Bank’s expectations following the 2025 interest rate cut.
During a speech at an Australian Chamber of Commerce luncheon, he acknowledged that even with the central bank raising interest rates last week, loans have remained accessible.
“I would say credit growth…is part of something we might have slightly overlooked,” he noted.
While some financial conditions remain accommodating, he mentioned that the increase in cash rates should manifest in the future.
New lending restrictions from the prudential regulator, effective February 1, now limit banks to approving only 20% of new loans for customers with high debt-to-income ratios. Hauser commended this measure, calling it “smart design.”
“What we tell banks is, ‘Go ahead and approve those loans; that’s perfectly fine, but just be cautious. We are concerned that credit growth could reach an unsustainable level.’”
