The Commonwealth Bank applied changes across its whole range of term deposit products, slashing the rates by as much as 60 basis points, while hiking one particular term.
CommBank's non-conditional one-year TDs received the biggest cut, bringing the rates down from above 4% p.a. to 3.90% p.a. and 4.00% p.a.
Meanwhile, existing personal and SMSF customers can get a special offer rate of 4.50% p.a. on 12-month terms.
In between a wide range of rate cuts, CommBank lifted the returns on nine-month terms by 50 to 55 basis points.
Term deposits on nine-month terms now carry the bank's top rate - 4.45%-4.50% p.a. for non-conditional TDs, and 4.80% p.a. for customers eligible for the special offer.
Following the latest adjustments, CommBank's TD rates have further fallen behind market leaders, with its one-year term returns, for instance, now 110 basis points below the top rate in the same term.
Here are the new rates on some of CommBank's non-conditional TDs with deposit sizes of $5,000 to $50,000:
|
Term length |
New rate (change) |
Payment frequency |
|
3 Months |
3.20% p.a. (-25 bps) |
At maturity |
|
6 Months |
3.45% p.a. (-25 bps) |
At maturity |
|
9 Months |
4.50% p.a. (+55 bps) |
At maturity |
|
1 Year |
4.00% p.a. (-60 bps) |
Annually |
|
2 Years |
3.80% p.a. (-15 bps) |
Annually |
|
3 Years |
3.55% p.a. (-40 bps) |
Annually |
|
4 Years |
3.55% p.a. (-40 bps) |
Annually |
|
5 Years |
3.55% p.a. (-40 bps) |
Annually |
These term deposit adjustments took effect on the same day CommBank announced its 2024 financial year results.
More notably though, the bank lowered its rates as it maintains its view of a November 2024 RBA rate cut - the last of the major banks with this view.
CBA earnings drop after last year's record profit
CommBank ended FY 2024 posting $9.8 billion in net cash profits, down 6% from its record results last financial year.
The bank attributed the drop in earnings to inflationary increases in operating expenses.
"Operating expenses increased 3% due to higher inflation impacting staff costs, additional technology spend to support the delivery of our strategic priorities, and lower one-off items," the bank said.
While the latest wage price index revealed that wages growth peaked in Q2, wages in Australia accelerated within the same period as the 2024 financial year.
CommBank's operating costs, including staff salaries, reached $12.2 billion.
The 1% increase in investment spending was used in investments in technology improvements designed to "enhance customer services" and meet "evolving regulatory requirements".
CommBank's net interest margins (NIM) - a measure of profitability comparing the bank's funding costs and interest rates it received from lending it out - fell 8 percentage points to 1.99%.
In addition to inflationary pressures, the bank cited increased business competition for loans and "deposit switching" as the main driver of the decline, while adding that margins have since stabilised in the second half of the financial year.
The bank's impaired assets grew to $8.7 billion, up from $7.1 billion last year.
While the majority of the bank's mortgage borrowers remain ahead of scheduled repayments, CBA noted the increase in home loans in arrears as a result of the impact of higher interest rates and cost of living pressures.
Mortgagors 90 days behind on repayments in the past six months rose 0.65%, up from 0.47% last year.
Those 30 days behind increased by 1.3%, up from 0.92% in FY 2023.
"Higher interest rates were slowing the economy and gradually moderating inflation," CommBank CEO Matt Comyn said.
"At the same time, the economy was proving to be resilient as a result of low unemployment, continued private and public investment, and exports supporting national income."
Cost of living pressures affecting CommBank customers
The bank's impaired loan expense was down 28% to $802 million, off the back of robust credit origination and underwriting practices, rising house prices, and improved consumer finance outlook.
Though CommBank expects a gradual deterioration in mortgage stress into the next year, it said higher inflation and interest rates continue to weigh on borrowers, albeit remaining at low levels.
Spending on essentials has increased across all age groups, the bank reported.
CommBank customers aged 25-34 years old saw their spending on essentials balloon to 4.3%, while discretionary spending fell 1%.
As their expenses increased, the said demographic, comprised of Millennials and Gen Z, saved 5.2% less than the previous corresponding period.
"Many Australians continue to be challenged by cost-of-living pressures and a fall in real household disposable income," Mr Comyn said.
"With slower economic growth and moderating demand, our strong balance sheet allows us to continue to support our customers and the broader economy and deliver sustainable returns."
CommBank reported that 132,000 tailored payment arrangements have been provided over the last 12 months to help customers in need to manage repayments and household budgets.
According to the bank, more than 6 million eligible customers can now access up to $2,000 in credit with no interest and no monthly fees.
"For customers who are finding it tough, we can support them in lots of different ways - from helping them feel more in control, to easing the pressure with a repayment plan, or accessing a safety net or working capital to support their business," Mr Comyn said.
Photo courtesy of CommBank
