Commonwealth Bank of Australia, the country's biggest mortgage lender, posted a record first-half cash profit on Wednesday, backed by surging investor demand to buy into the country's hot property market.
Annual growth in Australian home prices reached 10.7 percent in January, with record-low interest rates helping to fuel demand from investors at a time when many first-time home buyers are being priced out of the market.
"There is no doubt that at the moment there are more investors able to afford houses than owner-occupiers," CBA Chief Financial Officer David Craig said in a phone interview with Reuters. "That is where the demand is."
The bank's profit for the six months ended December 31 rose 2 percent to A$4.907 billion ($3.75 billion), slightly ahead of an estimated A$4.845 billion from three analysts polled by Thomson Reuters I/B/E/S.
The bank has a 25.4 percent market share in home loans, helping to drive profitability but making it the most vulnerable of Australia's 'Big Four' banks to any downturn in the housing market.
The proportion of investor loans written by the bank has also risen to 37 percent from 31 percent a year earlier, raising concerns it is close to breaching a 10 percent annual cap on investor property loan growth set by regulators in 2014.
CBA has started to turn away some property investors looking to refinance their loans, and the bank said on Wednesday it would hike rates for interest-only investor loans by 12 basis points.
"Our interest only investor loan rate was below all of our competitors and we were finding we were getting very large demand," Craig said. "We are determined to stay below the benchmark (of 10 percent growth)."
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