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Commonwealth Bank of Australia (CBA) said its unaudited cash earnings for the September quarter was about $1.4 billion, with the result supported by good income growth and the group’s approach to cost management. The company said competition remain strong, particularly in deposits where margins are under pressure.

CBA said its impairment expense charge was approximately $700m, with credit quality trends generally moving in line with expectations

“Consumer arrears remained broadly stable, with improvements in the credit cards and Bankwest home loan portfolios offset by a slight increase in CBA home loans, driven, in part, by customer take-up of repayment “holidays” offered under the Group’s Customer Assist Programme,” the company said.

CBA said impaired assets increased slightly to 88 basis points of gross loans, while group Net Interest Margin improved slightly overall.

The company said its Tier 1 capital ratio strengthened to 8.7%, while liquid asset balances were maintained at approximately $87 billion.

“A continued prudent approach to wholesale funding, with unguaranteed long term debt issuance accounting for 70 percent of financial year-to-date funding,” CBA said.

CEO, Ralph Norris, said the result particularly benefited from an improvement in the company’s Wealth Management division as equity markets recovered through the quarter.

“Whilst the economic outlook has improved since our results in August, the pace and extent of the recovery remains unclear,” Mr Norris said.

”We will therefore continue to retain our conservative business settings until such time as a sustained improvement is evident.”

Mr Norris added that the operating environment remained challenging.

“Average funding costs are increasing, credit growth has slowed and competition remains strong,” he said.

“A number of our customers will continue to face financial hardship that will require our ongoing assistance and support.”

At the close of trade Friday, Commonwealth Bank shares were trading at $52.71.

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