May 17 (Bloomberg) -- Commonwealth Bank of Australia, the nation’s biggest bank by market value, said third-quarter profit rose 2.9 percent as charges for bad debts fell.
Unaudited cash earnings in the three months ended March 31 climbed to A$1.75 billion ($1.74 billion), the Sydney-based bank said in a statement today, compared with the A$1.7 billion it reported for the same period in 2011. Impairment expenses fell to A$232 million, or 0.18 percent of total average loans.
Chief Executive Officer Ian Narev, who took over from Ralph Norris in December, is battling to maintain a lead in mortgages as demand for home loans wanes to the weakest since 1977. Rising wholesale funding and deposit costs are cutting the profitability of lending for the nation’s biggest banks even as the Reserve Bank of Australia lowers the developed world’s highest benchmark interest rate.
“Subdued credit demand and elevated funding costs continued to impact on revenue growth,” Commonwealth Bank said in the statement. “Higher funding costs had a further negative impact” on net interest margins, the bank said, without providing figures.
Shares of Commonwealth Bank fell 1.5 percent to A$51.02 at the close of Sydney trading. The benchmark S&P/ASX 200 index dropped 0.2 percent.
Commonwealth Bank increased its market share in business lending, while conditions in retail banking “remained challenging,” according to the statement.
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