Commonwealth Bank: Q3 Result 2015

CBA has been criticised for not passing on the full rate cut, but its third quarter result explains why.

Commonwealth Bank’s share price has fallen 12% over the past seven weeks and now the company is copping flack for not passing on the entire 25 basis point cut in the official cash rate to borrowers. While seemingly unrelated, these facts show that profit margins are under pressure, banks are becoming more capital intensive and they can no longer rely on the tailwind of falling bad debts to increase profits and dividends.

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