SYDNEY, May 14, 2026, 04:37 AEST
Commonwealth Bank of Australia shares suffered their biggest one-day fall on record on Wednesday, wiping nearly A$30 billion from the country’s largest lender after it raised loss buffers and investors reassessed the outlook for home-loan growth. The stock closed down 10.43%, while the S&P/ASX 200 slipped 0.46%.
The selloff landed a day after the federal budget proposed sweeping changes to property tax breaks, hitting a bank whose earnings are closely tied to Australian housing. Investors also had a fresh credit warning in front of them: CBA lifted collective provisions, or money set aside for expected losses across loan books, by A$200 million as it gave more weight to a weaker economic scenario.
CBA reported unaudited cash net profit after tax of about A$2.7 billion for the March quarter, up 4% from a year earlier but down 1% from its first-half quarterly average. Reuters reported the result was about 2% below some analyst forecasts.
The bank’s update showed operating income was flat, with a 1% rise in net interest income offset by lower other income. Net interest income is what a bank earns from loans after paying interest on deposits and other funding.
Chief Executive Matt Comyn said many households and businesses were dealing with higher energy prices and interest rates, adding that conflict in the Middle East was disrupting supply chains and adding to uncertainty. “We will continue to adjust our settings as appropriate,” he said in the trading update.
Loan impairment expense rose to A$316 million, or 12 basis points of average gross loans and acceptances, from A$223 million a year earlier, according to the company and Reuters. Consumer arrears and corporate troublesome and non-performing exposures increased in the quarter, with personal-loan arrears rising to 1.71% on loans more than 90 days overdue.
The broader sector was hit as well. Westpac, which Reuters said has Australia’s second-largest mortgage lending business, fell 3%, while National Australia Bank lost 2.6% and ANZ dropped 1.65%. Morgan Stanley analysts estimated Australian mortgage growth could slow to about 5.5% from 7.5% in 2027, with investor loan growth falling to 7% from 10%.
The budget changes go to the heart of that concern. From July 1, 2027, the government plans to scrap the 50% capital gains tax discount and move to inflation-indexed gains with a 30% minimum tax on net capital gains; it also plans to limit negative gearing, which lets investors offset rental losses against taxable income, to new builds.
CBA Senior Economist Trent Saunders wrote that the combined tax changes should leave house prices just under 3% lower than they otherwise would have been, while dwelling price growth is now forecast at 3% to December 2026, down from a previous estimate of 5%. He also warned that turnover is likely to fall initially as some investors hold properties to keep older tax treatment.
Rates are the other pressure point. The Reserve Bank of Australia raised the cash rate by 25 basis points to 4.35% on May 5, its third increase this year, and said inflation risks remained tilted to the upside because of higher fuel prices and the Middle East conflict.
Prediction markets still lean toward a pause next month. Kalshi showed a 65% probability of the RBA maintaining the current rate in June, versus 22% for a 1-to-25-basis-point hike, while Polymarket put “No Change” at about 80% and “Increase” at 21%. Kalshi
CBA Head of Australian Economics Belinda Allen said the central bank had room to monitor the economy after the May hike, but added: “A further rate hike cannot be ruled out, depending on the data.” She cited federal and state budgets, wage decisions, consumer spending and June-quarter inflation as key watchpoints. CommBank
VanEck senior portfolio manager Cameron McCormack said CBA’s update marked a more cautious turn, with arrears rising across personal loans, home loans and credit cards. “Provisioning has been stepping up across the major banks this reporting season,” he said, pointing to the cumulative effect of restrictive monetary policy. Investor Daily
The risk is that the pressure feeds through faster than expected. A longer conflict in the Middle East could keep fuel prices and inflation higher, forcing the RBA to tighten again and pushing more borrowers behind on repayments; weaker housing turnover would also cut into the volume growth banks need to offset margin pressure.
CBA’s capital position remains a cushion. The bank said its common equity tier 1 ratio, a measure of core capital, stood at 11.6% at the end of March, above the Australian Prudential Regulation Authority’s 10.25% minimum, while customer deposits funded 79% of total funding and liquidity ratios stayed above regulatory requirements.
