Commonwealth Bank's profit dropped last quarter while delinquencies ticked up, although they remain historically low.
CBA announced on Thursday it made an unaudited after-tax profit of $2.4 billion in three months to March 31, down five per cent from a year ago and down three per cent from its first-half quarterly average.
The percentage of customers more than 90 days behind on their home loans grew to 0.61 per cent, up from 0.52 per cent in the December quarter, but still slightly below CBA's 15-year average of 0.65 per cent.
There was a similar story with customers behind on their payments for personal loans and credit card debt - delinquencies grew, but are still below their long-term averages.
"We expect to see further increases in arrears in the months ahead given continued pressure on real household disposable incomes," the bank said.
But overall it believes the fundamentals of the Australian economy remain strong, with low unemployment, supported by business and government investments and elevated trade.
"We recognise all households are feeling the impact of higher inflation and higher rates, however, immigration is providing a structural tailwind for the economy," chief executive Matt Comyn said.
Saxo Asia Pacific senior sales trader Junvum Kim said that CBA's performance was "muted," hampered by shrinking margins amid heightened competition and rising operating expenses.
Nonetheless, the firm's financial foundations remain strong, with a capital ratio that well exceeds regulatory requirements and an increased provision for potential losses, underscoring its sturdy balance sheet, Mr Kim said.
E&P Capital analyst Azib Khan said that CBA's cash earnings run rate was better than consensus expectations, and its loan impairment expenses of $191 million was much lower than the $556 million that analysts were expecting.
At midday, CBA's shares were down 1.6 per cent to $117.88.
