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Commonwealth Bank boss Matt Comyn says the economy can withstand the hit from rising interest rates over the next six to twelve months, as household spending remains resilient despite high inflation and weak consumer confidence.
CBA’s profits rose 13 per cent to $2.5 billion in the September quarter, the bank said on Tuesday, as it reported very low levels of mortgage stress and predicted the impact of rising interest rates would be felt more sharply in 2023.
CBA chief executive Matt Comyn struck an optimistic tone regarding the bank’s economic outlook..Credit:Eamon Gallagher
Capping off a round of generally positive results from the country’s biggest banks, Comyn said business conditions remained strong, but there were “contradicting indicators” in the economy. On one hand, he said the bank had not detected clear signs of households tightening their belts, bad debts were at low levels and the labour market remained “very strong”.
But he also stressed that households were not yet feeling the full effect of interest rate rises, there had been a decline in job ads and house prices, and CBA expected the slowing economy would become more apparent over 2023.
“I think there’s a path over the next six or twelve months where we believe that there will be the broader impact felt from the changes in the cash rate, but we believe that that will be able to be navigated,” Comyn said.
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While banks have been predicting a drop in discretionary spending for months, Comyn said spending overall remained strong, and he highlighted “very strong” trading conditions in hospitality, travel and entertainment.
“We probably would have anticipated a slight softening, but I think there’s a range of different indicators that continue to support, I think, a strong end to the calendar year overall,” Comyn said.
The update comes amid ongoing questions about CBA’s plan to trial cryptocurrency trading, following the collapse of crypto exchange FTX. CBA said in November last year it planned to roll out some crypto features to customers in 2022, but the project has been delayed this year, and the latest collapse could result in regulators being even more cautious towards a crypto offering from the country’s largest bank.