Commonwealth Bank CEO makes admission about latest interest rate cut – as bank reports eyewatering profit

The chief executive of Australia’s biggest bank is predicting life will still be tough for many borrowers even with more interest rate cuts.

Commonwealth Bank boss Matt Comyn made the call a day after the Reserve Bank of Australia cut interest rates again for the third time in six months – taking the cash rate back to 3.6 per cent for the first time since 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 unveiled a record $10.3billion cash profit for 2024-25 a day after the RBA cut rates again and signalled more relief for borrowers. 

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

‘Pleasingly, many households have seen a rise in disposable incomes due to the recent relief from reduced interest rates, lower inflation and tax cuts.

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

The Commonwealth Bank revealed home loan arrears had stabilised in the June quarter, following rate cuts in February and May, with 85 per cent of mortgages ahead of schedule. 

‘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.’

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 sot that improves their feeling of wellbeing and that also increases consumption.’

Commonwealth Bank shareholders are receiving a fully franked, full-year dividend of $4.85 a share.