On the CBA result:
Event
- CBA’s 1Q17 headline result was largely in line with our expectations, albeit on a pre-provision basis the result was a touch softer. While we are cautious of reading too much into quarterly trends, CBA’s semi-annualised underlying earnings appear to be ~2% below our expectations. Furthermore, consistent with trends from peers, trading income supported revenue performance while margins were slightly lower despite mortgage repricing benefits. We suspect this was driven by lower underlying mortgage margins (ex. repricing benefits), a result of aggressive competitive dynamics from 2H16. CBA’s capital position was stronger than we expected underpinned by well controlled credit RWA (a similar trend across the sector) and lower than expected impact of mortgage RWAs change (80bps vs 100bps). On a proforma basis, CBA’s core tier one capital of 9.4-9.5% is now broadly consistent with peers (WBC is 9.5%, NAB is 9.6% and ANZ is 9.8%).
