CBA Faces Headwinds: Mortgage Applications Drop 15% Amid Tax Changes

The Commonwealth Bank of Australia reported a 15% drop in mortgage applications due to property tax changes introduced in May. Despite a record A$10.98 billion cash profit, challenges remain amid a slowing economy, high interest rates, and inflation pressures. The bank's shares dropped 1.3% as high valuations are questioned.

The Commonwealth Bank of Australia (CBA) has reported a 15% decline in mortgage applications following property tax changes implemented in May. This emerges as a key challenge for the country's largest lender, even as it recorded a record A$10.98 billion cash profit for the year.

On Wednesday, the bank cautioned about a slowing economy, beset by high interest rates and inflation impacting household budgets and economic activity. As a result, shares in CBA fell 1.3% during mid-session, overshadowing a 0.7% drop in the benchmark index as investors questioned the bank's high valuations amid an uncertain outlook.

Despite surpassing Visible Alpha's consensus estimate with cash earnings for the financial year ending June 30 at A$10.98 billion, the bank faced a challenging environment with a net interest margin of 2.05%, three basis points down from the previous year. CBA and rivals are grappling with reduced home loan applications, signaling potential growth constraints ahead.