Commonwealth Bank posted a statutory Net Profit after Tax (NPAT) of $9.23 billion, a 2% increase from the 2015 financial year. Net Interest Margin (NIM) was down 2 basis points to 2.07% with operating income growing 5% at a faster rate than expenses (4%) leading to a 0.40% improvement in the cost-to-income ratio to 42.4%. This result is broadly credit neutral, with all divisions contributing to NPAT CBA’s loan portfolio is of high quality despite mortgage lending growth of 7%, being higher than systematic growth of 6.7%. APRA’s new lending criteria for residential mortgages could cause some issues going forward but given its historical performance we do not think this will be an issue as lending standards continue to be tightened. Operating conditions for CBA, and banks in general, are expected to remain challenging over the next 12 months. Click here for updated research.