UBS banking analyst John Storey said customers switching to high-interest term deposits and savings accounts was weighing on the bank’s profit margins. He was also expecting the CBA to report bad debts of $498 million, ten per cent above consensus.

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“A key focus of the result will be signs of a stronger-than-expected NIM from a normalisation in competition, reduced cost of deposit mix changes, and benefit of replicating portfolio,” UBS wrote in a note this month.

Citi said the commentary on banks’ net interest margin would “prove more optimistic than market anticipates”, but noted CBA and Westpac were better placed than their rivals. Its estimates for CBA’s cash profit is in line with consensus, but is expecting the bank’s loan growth in the second half to be stronger than expected, with total loans tipped to hit $940 billion.

“We think a combination of easing mortgage pressures, stalled deposit pricing and switching, and better earnings on the replicating portfolio could deliver better than expect NIM commentary,” Citi research stated. “And after all, rate rise or no rate rise, it’s a game of expectations.”