CBA Delivers Resilient 3Q26 Result as Cash Profit Holds Firm and Balance Sheet Strength Remains Strong

About Commonwealth Bank of Australia

Commonwealth Bank of Australia (ASX: CBA) is the country’s largest bank, providing retail banking, business banking, institutional banking, payments and related financial services. Its scale across home lending, household deposits and business banking gives it a central role in the Australian financial system. The bank’s strategy is focused on customer relationships, digital capability, productivity, disciplined balance sheet management and sustainable shareholder returns.

Earnings remained resilient

CBA’s third-quarter result showed a business still producing strong earnings despite cost-of-living pressures, elevated interest rates and global uncertainty. Unaudited cash NPAT was approximately $2.7 billion, down 1 per cent compared with the 1H26 quarterly average but up 4 per cent on the prior comparative quarter. Statutory NPAT was approximately $2.6 billion.

Operating income was flat in the quarter, with higher net interest income offset by lower other operating income. Net interest income increased 1 per cent, supported by deposit and lending volume growth, earnings on the replicating portfolio and higher deposit margins. This was partly offset by cash rate lag, a weaker New Zealand dollar, competition in home and business lending, and two fewer days in the quarter.

The bank said underlying net interest margin was broadly stable, excluding non-recurring tailwinds. This is important because margin stability remains a key driver of bank profitability, especially in a competitive lending market where pricing remains sharp and customers continue to compare offers closely.

Volume growth supported the result

CBA continued to deliver disciplined volume growth across major areas of the business. Home loan new funding remained strong at $45 billion for the quarter. For the 12 months to March 2026, home loan balances increased by $41 billion, broadly in line with system growth. Household deposits increased by $38 billion over the same period, growing at 1.1 times system.

Retail transaction accounts also increased by more than 170,000 during the quarter, mainly driven by new-to-bank account openings. This supports CBA’s large customer base and strengthens its deposit funding position.

Business banking also remained a positive contributor. Business transaction accounts increased 7 per cent compared with the prior comparative period to 1.4 million accounts. Business lending grew above system, with diversified growth across sectors, while the bank maintained a disciplined approach in a competitive market.

Costs were controlled while technology investment continued

Operating expenses, excluding restructuring and notable items, increased 1 per cent in the quarter. The increase was mainly driven by higher cloud computing volumes, software licensing and investment in artificial intelligence capabilities. These pressures were partly offset by two fewer days in the quarter, the benefit of a weaker New Zealand dollar, timing benefits and ongoing productivity initiatives.

This shows CBA is still investing in its technology base while keeping cost growth contained. Investment in cloud, software and AI reflects the bank’s focus on improving digital capability, productivity and customer experience.

Operating performance, measured as operating income less operating expenses, increased 1.7 per cent on the 1H26 quarterly average and 5.6 per cent on the prior comparative quarter. That suggests the bank continued to execute well, even with flat income and a cautious operating backdrop.

Credit quality remained sound, but provisions increased

One of the more important parts of the update was the increase in provisioning. Loan impairment expense was $316 million, or 12 basis points of average gross loans and acceptances. CBA increased the forward-looking component of collective provisions by $200 million after revising macroeconomic forecasts and increasing the weighting of its downside scenario.

This does not point to a major deterioration in the current loan book, but it does show the bank is taking a more cautious view of future risks. CBA pointed to heightened geopolitical and macroeconomic uncertainty, including the impact of conflict in the Middle East, supply chain disruption, higher prices and elevated interest rates.

Underlying portfolio credit quality remained sound and actual losses remained low. Individual provisions were flat at $0.8 billion. Provision coverage also remained strong, with total provision coverage at 1.57 per cent.

There were still some signs of pressure. Consumer arrears increased during the quarter, with home loan and credit card arrears rising modestly due to seasonality. Personal loan arrears increased more noticeably, while corporate troublesome and non-performing exposures rose to $6.5 billion, or 0.94 per cent of total committed exposure.

Funding and liquidity remained major strengths

CBA’s balance sheet remained one of the clearest strengths in the update. Customer deposit funding represented 79 per cent of total funding, while the proportion of short-term wholesale funding remained well below historical levels.

The bank had issued $32 billion of new long-term wholesale funding for FY26 to date across multiple markets and products. Long-term wholesale funding accounted for 68 per cent of total wholesale funding, with a weighted average portfolio tenor of 5.2 years. Liquidity settings also remained strong, with a Liquidity Coverage Ratio of 133 per cent and a Net Stable Funding Ratio of 116 per cent.

Capital position remained strong

CBA’s CET1 Level 2 capital ratio was 11.6 per cent at 31 March 2026, above APRA’s minimum regulatory requirement of 10.25 per cent. The bank paid $3.9 billion in dividends during the quarter, benefiting more than 800,000 direct shareholders and more than 14 million Australians through superannuation exposure.

Outlook

CBA’s third-quarter update showed a high-quality banking franchise navigating a more difficult environment with discipline. The key positives were resilient earnings, stable underlying margin, strong deposit funding, solid liquidity, above-system business lending growth and a capital position comfortably above regulatory requirements.

The main risks remain cost-of-living pressure, higher energy prices, elevated interest rates, global supply chain disruption and geopolitical uncertainty. These factors could weigh on household spending, business activity and credit quality over coming periods.

Overall, CBA appears to be entering the final quarter of FY26 with strong balance sheet settings, disciplined execution and a cautious approach to provisioning. While earnings growth was modest, the bank’s scale, funding strength and capital position leave it well placed to support customers and manage uncertainty.