In February, CBA reported earnings per share of $2.73 and the stock trades on 18.9 times annualised earnings based on a $102.99 share price. CBA’s net interest margin fell 17 basis points to 1.92 per cent for the six months to December 31, versus the prior period.On Tuesday, CBA said it would pass on the RBA’s rate increase with an equivalent 0.25 percentage point increase across all its variable interest home loans. NAB also raised variable mortgage rates by 0.25 per cent.
If the banks choose to raise mortgage rates faster than the central bank’s cash rate during an aggressive rate hike cycle, then every 10 basis point increase relative to the cash rate adds around 3 basis points to their profit margins, the broker said.
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