For the Commonwealth Bank chief executive, this week will have a distinctly different flavour. Comyn is now on the West Coast, taking in all things tech. He’s currently visiting the bank’s recently opened AI hub in Seattle, and this week meets with Microsoft boss Satya Nadella at the tech giant’s annual AI conference for a glimpse of the future.
“I didn’t think it was as bearish as expected,” Comyn says of the mood on the ground, particularly on the New York leg.
Comyn’s trip has coincided with US President Donald Trump’s tariff roller coaster, including concerted efforts by the new US administration to win back markets over the past week. There have been strong signs over the weekend of a cooling of trade tension between China and the US.
Comyn tells The Australian geopolitical tensions are here to stay, and Australian business will have to get used to a world with heightened trade volatility.
However, what he has seen so far doesn’t give him any cause for concern to change the course for the nation’s biggest bank.
This includes being in a position of having more financial flexibility, and that means more cash on the balance sheet.
Through February and March, well before the impact of Trump’s Liberation day, CBA went full speed on money markets, scooping up a monster $36bn while interest rates were relatively low. Indeed, its bank is now in the comfortable position of being fully funded right through to the end of the financial year. It has avoided the turmoil in bond markets that followed the Trump’s tariff announcement.
Global growth, or certainly relative to six or nine months ago, is going to be slightly lower. I think consensus, you know, an easing or slowing of the economy in the US that will take some time to feed through into the actual economic data.
But if there is a contraction, and it’s a (US) recession, it’s likely to be quite a shallow one.
No doubt the tariff announcement and now the negotiation period have made life tougher for business, given the outcome remains up in the air.
“Markets don’t like uncertainty. Businesses don’t like uncertainty, but I believe that things will settle down. There are still a lot of structural positives in the US economy as well”.
He pointed to early signs of US inflation remaining contained, although he noted these numbers will move around on tariffs.
Comyn was speaking as CBA posted March quarter cash profit of $2.6bn, flat on the first half quarterly average and up 6 per cent from the same time last year. Revenue was up 1 per cent, while expense growth was relatively contained, rising 1 per cent. The results bucked the trend of rival banks Westpac and NAB with a March half year reporting date where earnings were slightly lower to flat. The numbers were just enough to keep the support under CBA’s heated shares, which are sitting just off an all-time high. CBA was trading up 0.5 per cent at $166.98, giving the bank a valuation more than double Westpac.
Casting a shadow over CBA’s numbers were the long tail of stressed loans, which were still risings following the peak in the interest rate cycle. While still tracking below average lending losses, the loan loss rate drifted up in the March quarter back to the levels last seen in June. The rise came about even as the Reserve Bank cut the cash rate in February, and there’s talk of more to come later this month.
Comyn says there’s seasonality in the consumer arrears, including credit cards and personal loans, which is typical in the period post-Christmas. So too there were several one-off business loans that went bad, but he maintains there’s nothing systemic in the numbers, particularly with employment numbers robust.
Australia is better placed than most, Comyn says. Inflation and therefore interest rates are expected to come down. Which will help household income. The political stability coming out of the election is an important part of this, he adds. There’s an opportunity now for government and for businesses – large and small – to work constructively on a broader growth agenda.
“Australia overall is in a strong position. There’s reason to be optimistic”.
johnstone@theaustralian.com.au
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Matt Comyn has spent the past few weeks on a US roadshow, meeting big investors in New York and beyond, and also spending time in Washington to take the temperature there. Including a visit to Kevin Rudd’s Australian Embassy.