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UPDATE 2-Australia's CBA cash profit doubles in rebound from COVID slump

05/11/2021 18:29
UPDATE 2-Australia's CBA cash profit doubles in rebound from COVID slump

CBA posts Q3 cash profit of A$2.4 bln

Lending volume growth robust

Home loan arrears rise as deferrals wind down

Adds details on lending, margins, CEO comment

By Shashwat Awasthi

- Commonwealth Bank of Australia's CBA.AX third-quarter cash profit doubled as a rapid economic recovery spurred lending and enabled the country's largest bank to reverse bad debt provisions made during the COVID-19 pandemic.

Australia's control over the pandemic, near-zero interest rates and government spending has allowed its banks to recover quicker than their global peers and move funds set aside for potential COVID-19 losses back into profits.

Last week, peers Westpac WBC.AX, National Australia Bank NAB.AX and Australia and New Zealand Banking Group ANZ.AX together reversed nearly A$1 billion ($783.8 million) in bad debt provisions, boosting their half-year profits and dividends. nL4N2MS4JK nL1N2MQ00W nL4N2MR3UN

"Credit quality across our lending portfolios remained sound," CBA Chief Executive Officer Matt Comyn said in a statement on Wednesday.

The lender's cash net profit after tax from continuing operations rose to A$2.4 billion from about A$1.2 billion a year earlier. nAZN015R9H

CBA, which follows a different reporting calendar than its rivals, said it booked a loan impairment benefit of A$136 million in the quarter, compared with a A$1.6 billion expense last year.

It lowered its total credit provisions to A$6.5 billion at the end of March, from A$6.8 billion at the end of December.

The bank said its adjusted net interest margin - a key metric of profitability - also benefited from an increase in zero-cost deposits and lower wholesale funding costs.

CBA, which aims to take the No.1 spot for business lending from NAB, said its quarterly business lending volume grew 8.1%, at more than three times the market rate.

The Sydney-based lender reported troublesome and impaired assets of A$7.8 billion at the end of March, lower than the A$8.2 billion on its books three months earlier.

The lender said it saw a small rise in home loan arrears in the quarter as deferral of mortgage payments ended, and expects further modest increases in the coming months.

($1 = 1.2758 Australian dollars)

(Reporting by Shashwat Awasthi in Bengaluru; Editing by Shailesh Kuber and Stephen Coates)

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