The Commonwealth Bank has slashed the number of customers reliant on loan deferrals by two thirds

  • The Commonwealth Bank took a 16% hit in its quarterly results, as it posted strong lending growth.
  • Australia’s biggest bank slashed its loan deferral numbers, reducing frozen mortgages by two-third and business deferrals by 95%.
  • Deposits meanwhile continue to shoot up, growing by more than $15 billion, as households stockpile cash.
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Australia’s largest bank looks like it is getting on top of customer deferrals at a decent clip.

As hundreds of thousands of deferrals remain outstanding, the Commonwealth Bank has made some serious headway in bringing customers back into the fold and making repayments again.

On Wednesday, CBA released its quarterly results showing it was holding onto 46,000 frozen mortgages worth $19 billion. While considerable, it’s a major improvement for Australia’s largest lender, which was holding almost $50 billion worth just four months ago in June.

For comparison, that’s less than NAB and ANZ despite holding a far larger loan book.

The progress, however, pales compared to that which it has made with its business customers. Just 5% of June deferrals remain in place at just 10% of their peak value.

“We continue to contact customers with a range of options as they approach the end of temporary loan repayment deferral periods, and have been encouraged by the number of customers who have been able to return to making repayments,” CEO Matt Comyn said.

It comes one week after the bank became the only one to promise not to foreclose on struggling mortgage customers until at least September next year.

Noting a “careful approach to provisioning for the impacts of COVID-19”, loan impairment expenses fell to $500 million while the value of impaired assets on its books fell by $300 million over the quarter.

All in all, it recorded a 16% quarterly loss just a couple of weeks after rivals NAB, ANZ and Westpac noted losses between 37% and 62% in their own full-year results. While CBA runs on a different reporting timetable, its August full-year profit loss was just 11%, offset largely by its own “strong growth”.

“Operating performance in the quarter was highlighted by balance growth in home lending, business lending and deposits, which helped offset ongoing margin pressures from lower interest rates,” Comyn said.

As the biggest financial institution in Australia, the Commonwealth Bank provides an important barometer for how Australians generally are faring throughout the pandemic.

Unsurprisingly, deposits shot up by $28 billion, or 5%, over the quarter, with households representing nearly $16 billion of that, as customers continue to stockpile cash.

The Commonwealth Bank beat its competitors out on home and business lending, as loan applications continued to flow in.

But it will be the reduction in its existing risk that the bank will be most pleased about.

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