CBA closing in on another bumper year

Commonwealth Bank remains on track for another record full-year profit after maintaining the strong run of earnings by the big banks and reporting quarterly cash earnings of $1.9 billion.

The third-quarter result, for the three months to March 31, was up from $1.75 billion in the same period last year, and brings the bank's profit to $5.7 billion so far this financial year - on track to comfortably beat last year's full-year cash profit of $7.1 billion.

In a statement to the stock exchange, the bank said its revenue growth continued to reflect conservative management and modest growth in the credit market.

The country's largest home lender said its improved margins were "partly offset by higher funding costs". It reported growth in household deposits but said margins remained under pressure in a competitive market.

Deposit funding now makes up 65 per cent of its funding.

The bank's announcement follows a string of record half-year results for the other big four banks in the past month. Westpac's first-half profit jumped 10 per cent to $3.53 billion, ANZ reported an 8 per cent leap to $3.2 billion, while National Australia Bank's profits grew 3 per cent to $2.9 billion.

Consensus forecasts now suggest Commonwealth Bank is in line to report a cash profit of about $7.6 billion for the full year.

But in a note to clients, Credit Suisse warned the result was reliant on historically low bad-debt levels, and that growth in bank profits could be getting harder to achieve.

"The result suggests that the optimisation of bank earnings is reaching its limit, with bad debt charges as feasibly low as they can get, margin expansion and the pace of productivity improvements fading, and capital management initiatives now announced," it said.

But Morningstar analyst David Ellis said CBA's earnings growth was impressive given the low credit growth environment, and said shareholders could expect to reap higher dividends.

"CBA continues to get the basics right, extracting attractive earnings growth from a low credit growth environment - an outcome we have long argued to be very achievable," he said.

The bank also said the quality of its loans had remained sound in the three months to March, with arrears in home loans stable.

CBA shares gained 56¢, or 0.8 per cent, to $72.65 on Wednesday.