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Commonwealth Bank (ASX:CBA) share price higher on Q1 and loan deferral update

The Commonwealth Bank of Australia (ASX:CBA) share price has been a strong performer on Wednesday. Here’s why it is charging higher…
The post Commonwealth Bank (ASX:CBA) share price higher on Q1 and loan deferral update appeared first on Motley Fool Australia. –

Commonwealth Bank place Sydney NSW

The Commonwealth Bank of Australia (ASX: CBA) share price has been a positive performer on Wednesday and is pushing higher in afternoon trade.

At the time of writing, the banking giant’s shares are up 2% to $73.83.

Why is the Commonwealth Bank share price pushing higher today?

There have been a couple of catalysts for the rise in the Commonwealth Bank share price today.

The first is the release of its first quarter update, which revealed a stronger than expected cash net profit after tax of $1.8 billion.

While this was a 16% decline on the prior corresponding period, a note out of Goldman Sachs reveals that it is run-rating ~6% ahead of what is implied by the broker’s half year forecasts. This was driven largely by lower than forecast bad and doubtful debt charges.

COVID-19 temporary loan deferral update.

Also giving the Commonwealth Bank share price a boost today was the release of an update on its COVID-19 temporary loan deferrals.

According to the release, at the end of October there was a net reduction in total loan deferred facilities of 59%, representing a monthly net reduction in deferred balances of ~$21 billion.

New approved deferrals totalled $4.6 billion during the month, of which $4.5 billion were an extension of an existing deferral.

There are now approximately 52,000 loans in deferral, down 75% from the 210,000 it recorded at the end of June.

Which loans are being deferred?

There has been a net reduction in deferred home loan facilities of 51% during the month of October, representing a monthly net reduction in deferred balances of ~$18 billion.

9,300 facilities have been granted an extension of their deferral arrangement for a period of up to 4 months. Victoria continued to account for the largest proportion of monthly deferral extensions (39%).

At the end of the period there were approximately 45,600 home loans still in deferral. Of these, 27% (balances of $4.8 billion) are due to expire and exit in November.

In respect to SME loans, there was a net reduction in deferred SME loan facilities of 87% during the month of October. This represents a monthly net reduction in deferred balances of $2.5 billion.

Approximately 4,200 SME loans remained in deferral at the end October (balances of $1.5 billion), with 31% ($0.5 billion) of these due to expire and exit in November.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Commonwealth Bank (ASX:CBA) share price higher on Q1 and loan deferral update appeared first on Motley Fool Australia.

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