Commonwealth Bank stock: Business lending offsets credit strain

Commonwealth Bank of Australia's first-quarter fiscal 2027 update left investors with a mixed picture, according to a Morningstar analysis published on Friday, November 13. Cash profit was about AUD 2.8 billion, while stronger business lending was offset by rising costs and credit risks.

Business lending supports earnings

Business loans increased 14% on an annualized basis in the first quarter, outpacing Morningstar's fiscal 2027 forecast. The analyst said loan growth lifted income, but expenses also increased, limiting the benefit for earnings.

Loan impairment expense rose to AUD 300 million. Morningstar said credit stress was increasing from low levels but remained manageable, with softer house prices, higher unemployment and weaker economic growth potential risks for future bad debts.

Mortgage pressure is building

Home-loan applications fell 16% from a year earlier. Mortgage arrears of at least 90 days rose by 7 basis points to 0.80%, reflecting pressure from inflation and interest rates. The bank's home-loan growth is slowing, while net interest margins remain broadly stable.

For investors, the key tension is between resilient business lending and a less supportive housing market. Morningstar expects housing credit growth to slow and continues to view operating expenses as a central watchpoint. The analysis also said Commonwealth Bank's credit quality was normalizing from low levels.

Commonwealth Bank stock traded at 105.05 euros on Lang & Schwarz at 15:33 CET on Friday, November 13.

Australian equities remain in focus alongside Current market reports.

More news and analyses on Commonwealth Bank stock