CBA padding business and consumer margins

There are a few markers of the increased profit margins extracted by Commonwealth Bank across its lending portfolio over the last year in the bank's December 2008 profit release.

Across the group, the average interest rate paid on liabilities fell over the last half year by 30 basis points to 5.57 per cent. Over the same half year (and by the year-end) the cash rate in Australia fell 300 basis points while in New Zealand it fell 325 basis points.

The yield on average interest earnings assets increased on business and corporate loans by five basis points and increased on consumer loans by 72 basis points.

Only in home lending did the average yield on assets fall, by 16 basis points, which was half the fall in the group's cost of funds.

In consumer banking CBA reported net interest income increased by 19 per cent in the December 2008 half versus the December 2007 half, close to double the rate of growth in net interest income in home lending (where pressure for rate relief is strongest) or in retail deposits.

Fee income from consumer loans increased 32 per cent over 12 months, more than double the rate of growth in fees from home lending.

The bank reported growth in card balance (over 12 months) of five per cent and growth in personal loans of eight per cent. However, margin loans (included within consumer) fell over the half.