Commonwealth Bank CEO Matt Comyn admits record-high immigration is good for Australia’s biggest home lender as unemployment hits two-year high

The highly paid Commonwealth Bank executive has admitted record high immigration is good for Australia’s largest home lender.

Matt Comyn made the comment during an earnings presentation with analysts, a day before new figures showed unemployment hitting a two-year high.

This has raised concerns among Treasurer Jim Chalmers about borrowers struggling to cope with rising interest rates in areas where home prices are higher.

“Undoubtedly, strong population and migration growth is a major tailwind for the Australian economy and it is clear that the Commonwealth Bank benefits from higher economic growth,” Comyn said on Wednesday.

A net of 518,000 migrants moved to Australia in the period 2022-2023.

As a result, the Commonwealth Bank made a record net cash profit of $10.164 billion in the last financial year, while Mr Comyn benefited from a pay package of $10.426 million.

CBA’s balance sheet was strong in the July to December 2023 period, with the bank making a net cash profit of $5.019 billion in the first half of 2023-2024.

This is despite the Reserve Bank of Australia raising rates for the 13th time in 18 months in November, taking the cash rate to a 12-year high of 4.35 percent.

Higher interest rates are taking their toll on the economy, with unemployment rising from 3.9 percent to a two-year high of 4.1 percent in January, while only 500 new jobs were created, new figures from Australia’s Bureau of Statistics released on Thursday.

Dr. Chalmers blamed higher interest rates for higher unemployment.

“This is also the inevitable consequence of higher interest rates and persistent inflation and global economic uncertainty,” he said.

He was particularly concerned about NSW, where Sydney’s $1.395 million median house price means borrowers are under more mortgage stress.

“Certainly, those parts of Australia more exposed to mortgage pressures feel the pain disproportionately when interest rates rise,” Dr Chalmers said.

House prices in Australia have continued to rise despite the cost of living crisis, as rising population growth made it harder for renters to find somewhere to live.

Treasurer Jim Chalmers blamed higher interest rates for higher unemployment (photo left with Prime Minister Anthony Albanese)

Record population growth has kept Australia from falling into recession, but the economy has been in per capita recession since early 2023, with output per worker shrinking.

Higher immigration contributes to traffic congestion, which in turn affects productivity.

Falling output can worsen inflation because it means companies have to pass costs on to consumers to make profits, leading to higher prices for goods and services.

Reserve Bank Governor Michele Bullock admitted she did not know why Australian productivity fell while it was recovering in the United States.

“They are the outlier: everyone is just like us,” she told the Senate economics committee on Thursday.

‘I don’t think we know exactly what the difference is.

“One thing I would note is that our workforce growth has been much stronger.”

The Commonwealth Bank is a member of the Business Council of Australia, which lobbies the government to keep immigration levels high.

While high population growth is good for alleviating skills shortages, housing demand deprives middle and middle-income earners of the opportunity to buy a property they can occupy in a capital city.

A record 518,000 net migrants moved to Australia in 2022-2023

Mr Comyn told analysts the Commonwealth Bank would be happy to finance affordable housing projects.

“We are also trying to bring in more capital or contribute to the development of some of the social and affordable housing,” he said.

Australia’s permanent and long-term immigration inflows fell on a net basis to 447,790 in 2023, but this was still more than double the pre-pandemic level of 194,400 in 2019-20.