Commonwealth Bank (ASX: CBA) Delivers $2.8 Billion Quarterly Profit as Lending Growth Strengthens Its Earnings Outlook

Commonwealth Bank of Australia (ASX: CBA) has started the 2027 financial year strongly, delivering approximately $2.8 billion in quarterly cash profit as lending growth, expanding customer deposits and stable underlying margins support its earnings.

With profit rising 8% year-on-year and business lending growing faster than the broader banking system, Australia's largest bank continues demonstrating the strength of its domestic franchise. The key question is whether this momentum can sustain its premium valuation as credit costs increase.

Key Numbers

• $2.8 billion: Unaudited cash net profit for the September 2026 quarter, up 8% year-on-year.
• 13.6%: Annual business lending growth, adding $24.6 billion in lending balances.
• $39.8 billion: Increase in home lending over the 12 months to September 2026.
• 11.5%: Common Equity Tier 1 (CET1) capital ratio, above APRA's 10.25% minimum requirement.
• 132%: Liquidity coverage ratio, demonstrating substantial funding resilience.

The Latest Development: Strong Earnings and Expanding Lending

CBA's 11 November 2026 trading update revealed continued operating momentum during the three months ended 30 September.

Operating income increased 3% compared with the second-half FY26 quarterly average, supported by higher lending volumes and deposit growth.

Net interest income rose 4%, while underlying net interest margin remained broadly stable after excluding movements in liquid assets.

Business lending was a particular highlight, growing approximately 1.3 times faster than the banking system.

Home lending also expanded, supported by CBA's extensive customer relationships and established distribution network.

Although quarterly operating expenses increased 3%, cash profit remained broadly consistent with the second-half FY26 quarterly average.

The result demonstrates CBA's ability to maintain substantial profitability while expanding its core banking activities.

What Stands Out: Business Lending Creates Another Growth Driver

CBA's competitive strength extends beyond its position in Australian residential mortgages.

Business lending increased $24.6 billion over the year, while household deposits expanded $34 billion.

Customer deposits represented 79% of total funding, providing a reliable funding base and reducing dependence on wholesale markets.

This combination of lending growth and deposit strength supports recurring interest income and provides opportunities to deepen customer relationships.

Importantly, CBA is gaining ground in business banking, where stronger customer relationships could support earnings diversification.

However, valuation remains an important consideration.

At its 10 November closing price of $168.99, CBA traded at approximately 25.7 times FY26 cash earnings per share of $6.569.

We think the premium reflects confidence in CBA's profitability, franchise strength and capital position, although continued earnings growth will be needed to support those expectations.

What Commonwealth Bank Is Doing Now

CBA continues strengthening its digital banking capabilities while expanding residential and business lending operations.

The bank added more than 135,000 retail transaction accounts during the September quarter, supporting customer acquisition and engagement.

Technology expenditure remains a strategic priority, including investment in cloud infrastructure, software and artificial intelligence capabilities.

These initiatives could improve operational efficiency, strengthen customer retention and support long-term productivity.

CBA also issued $14 billion in long-term wholesale funding during FY27 to date.

Its 11.5% CET1 capital ratio and 132% liquidity coverage ratio demonstrate substantial financial flexibility, even after the payment of its $4.5 billion final dividend.

Insight: Can CBA Turn Its Lending Strength Into Sustainable Earnings Growth?

We think Commonwealth Bank's latest result reinforces its position as one of Australia's strongest banking franchises. Its expanding business lending portfolio, substantial deposit base and consistent profitability provide a credible foundation for continued earnings growth. Although mortgage arrears increased seven basis points and quarterly impairment expenses reached $300 million, the bank retains significant capital and liquidity buffers. Its premium valuation remains the principal consideration, but we believe CBA's diversified earnings base and established competitive advantages support a constructive long-term assessment, provided credit quality remains manageable.

What Happens Next?

CBA's next major financial milestone is its half-year results announcement on 10 February 2027.

Attention will focus on business lending growth, net interest margins, operating costs and credit quality.

The Reserve Bank's November cash rate increase to 4.85% also introduces opportunities and challenges for lending margins, deposit pricing and household repayments.

CBA has announced a 0.25 percentage point increase in variable home loan rates, effective 13 November 2026.

For shareholders, the next results will provide important evidence of whether expanding lending volumes and improving operational efficiency can sustain profit growth.

With strong capital, growing customer relationships and continued lending momentum, Commonwealth Bank enters the remainder of FY27 from a position of considerable financial strength.