The chief executive of Australia’s largest bank anticipates continued difficulties for many borrowers, despite further potential reductions in interest rates, following the announcement of a record profit.

Matt Comyn, the head of Commonwealth Bank, shared his viewpoint shortly after the Reserve Bank of Australia reduced interest rates for the third time in six months, bringing the cash rate down to 3.6 per cent, a level last seen in May 2023.

‘Inflation is back within the target band, and what we expect to be a modest rate-cutting cycle is underway,’ he said.

‘Consumer confidence has improved, but households remain stretched.’

Mr. Comyn introduced a record $10.3 billion cash profit for the 2024-25 fiscal year, reflecting a 4.2 per cent increase from the previous year, coinciding with the RBA’s recent rate cut and hints at more upcoming borrower relief. 

‘Even though sentiment remains subdued, we expect economic growth to improve modestly as the year progresses,’ he said.

‘Encouragingly, many families are experiencing increased disposable incomes thanks to recent reductions in interest rates, decreased inflation, and tax relief.

‘We have maintained our focus on supporting customers, particularly those still finding it tough dealing with cost-of-living pressures.’

Commonwealth Bank chief executive Matt Comyn is predicting life will still be tough even with more interest rate cuts

The Commonwealth Bank reported that home loan arrears remained steady in the June quarter following rate cuts in February and May, with 85 per cent of mortgages currently ahead of payment schedules. 

‘Loan impairment expense decreased reflecting lower loss experience and improved economic conditions,’ it said.

‘This was partly offset by the impact of an uncertain economic outlook due to rising global trade and geopolitical tensions.’

Mr. Comyn acknowledged the challenges of the past four years, which included Covid lockdowns and 13 interest rate increases throughout 2022 and 2023, but expressed optimism that the toughest period had passed.

‘Many households are now experiencing a rise in disposable income, and the financial gap between younger and older Australians has narrowed,’ he said.

‘Savings have increased, with younger Australians now rebuilding their financial buffers, and discretionary spending has also picked up, reflecting growing consumer confidence. 

‘And while we recognise many are still finding the context challenging, there is some positive momentum.’

Reserve Bank Governor Michele Bullock has suggested more rate cuts were likely in 2025 and possibly 2026, based on inflation remaining ‘sustainably’ within its target range. 

The Commonwealth Bank unveiled a record $10.3billion cash profit for 2024-25 a day after the RBA cut rates again and signalled more relief for borrowers

Reserve Bank Governor Michele Bullock has suggested more rate cuts were likely in 2025 and possibly 2026, based on inflation remaining ‘sustainably’ within its target range

‘The forecasts imply that the cash rate might need to be a bit lower than it is today to keep inflation low and stable and to keep employment growing,’ she told reporters in Sydney on Tuesday.

Updated Reserve Bank forecasts, released on Tuesday, had underlying inflation remaining at 2.6 per cent into 2026, or the midpoint of its two to three per cent target. 

Ms Bullock said those forecasts ‘are dependent on more interest rate cuts’. 

‘If we didn’t cut, we’d probably be missing both our targets,’ she said. 

The RBA chief also suggested rate cuts were likely to boost house prices.

‘Yes, we would expect to see it happen – we hope it happens in a nice, measured way,’ she said.

‘But ultimately we don’t forecast property prices, we can’t control what happens there because property prices are about supply and demand.

‘As housing prices rise, it increases people’s wealth so that improves their feeling of wellbeing and that also increases consumption.’

A stronger housing market ultimately benefits the Commonwealth Bank, as Australia’s biggest home lender. 

Commonwealth Bank shareholders are receiving a fully franked, full-year dividend of $4.85 a share, a 4.3 per cent increase compared with $4.65 in 2023-24.

The Commonwealth Bank was the first of the Big Four lenders on Tuesday to announce a cut to variable mortgage rates, with relief coming into effect on August 22.