Sydney, May 15, 2026, 03:12 AEST
Shares in Commonwealth Bank of Australia bounced back a bit on Thursday, following their record-breaking plunge the previous day. Still, investors are left grappling with the same tough issue: Canberra’s tax overhaul and the uncertainty it casts over the bank’s mortgage growth.
CBA rebounded 1.79% to close at A$156.42, clawing back some ground after Wednesday’s 10.43% plunge that wiped close to A$30 billion off its market cap. That late-session recovery on Thursday offered a boost to financials and nudged the S&P/ASX 200 slightly higher.
Timing here is key. Australia’s top lender, CBA, dropped its March-quarter trading update right as the federal budget shifted the landscape for property investors. A routine bank readout suddenly became part of a wider debate on housing credit, bank stock values, and rising financial pressure on households.
The bank reported cash net profit after tax at roughly A$2.7 billion for the quarter, a figure that excludes some accounting adjustments. It added A$200 million to its collective provisions—essentially padding reserves for potential loan losses that aren’t yet linked to particular customers. Loan impairment expense climbed to A$316 million. “Conflict in the Middle East is disrupting critical supply chains and contributing to global uncertainty,” Chief Executive Matt Comyn said.
Starting July 1, 2027, negative gearing for residential property will apply only to newly built homes. Investors use negative gearing to offset rental losses against other income. The plan scraps the 50% capital gains tax discount, introducing instead an inflation-indexed calculation and setting a 30% minimum tax rate on gains. Properties owned before budget night won’t be affected; they’ll stick with the old rules.
Pressure intensified for the banks. Morgan Stanley analysts, according to Reuters, now see Australian mortgage growth easing to 5.5% by 2027 from the current 7.5%, while investor loans are projected to slip to 7% from 10%. Shares of Westpac, National Australia Bank and ANZ dropped Wednesday as investors pulled back from the sector.
CBA economists aren’t bullish on housing. Trent Saunders, senior economist at CBA, said the budget tweaks will likely shave roughly 3% off house prices compared to previous projections, prompting the bank to revise its dwelling price growth outlook for December 2026 down to 3% from 5%. He also pointed out that prices could adjust more quickly if sentiment shifts.
Right now, rate outlooks aren’t shifting much, judging by prediction-market odds. Over on Polymarket, traders were putting the likelihood of the Reserve Bank of Australia standing pat at its June meeting at 80%, with the odds of a cut coming in under 1%. Kalshi’s central bank tracker put the RBA’s “Maintain current rate” contract for June at 97%. Polymarket
Credit is shaping up as the real concern here. Persistent pressure from higher oil prices, supply costs, and borrowing rates could force banks to boost their provisions for bad loans. “It’s all ahead of us,” said Jarden’s Matthew Wilson to Reuters. Angus Gluskie, managing director at Whitefield, echoed that if the conflict drags on, “the banks may need to provide more.” Reuters
CBA’s capital position remains solid, with a common equity tier 1 ratio at 11.6%—comfortably above the regulator’s floor. Customer deposits covered 79% of its funding.
The main question isn’t CBA’s profitability—nobody’s debating that. It’s whether investors are still willing to shell out for that premium, especially with housing turnover facing a possible slowdown, investor credit appetite looking shaky, and arrears no longer just falling.
