sydneycommonwealth bank of australia posted a 6 fall in annual net profit warning that downside risks are building as higher interest rates start to impact mortgage customers and costofliving pressures bite cba australias biggest bank by market value and the countrys largest mortgage lender said net profit for the 12 months through june fell to 1009 billion australian dollars us660 billion from a1077 billion a year earlier cash earningsthe measure followed by analysts that strips out items including hedging and losses or gains on acquisitions and asset salesrose 6 to a1016 billion from the previous year cash earnings for the fiscal second half fell 3 compared with the first half the australian economy has been resilient with the tailwinds of a recovery in population growth relatively high commodity prices and low unemployment ceo matt comyn said however there are signs of downside risks building as rising interest rates have a lagged impact on mortgage customers and other cost of living pressures become a financial strain for more australians cba said its portfolio quality remained sound with arrears and impairments below longterm averages reflecting low levels of unemployment and high levels of consumer savings and repayment buffers yet troublesome and impaired assets increased to a71 billion from a64 billion in fiscal 2022 which cba attributed to increases in the construction and commercial property sectors at the same time total impairment provisions increased to a595 billion from a535 billion in fiscal 2022 which cba said reflected the impact from ongoing cost of living pressures and rising interest rates on both the consumer and corporate portfolio the ultracompetitive homeloan market remained a factor for the lenders net interest margin a measure of the difference between what a bank pays to get deposits and funds and what it charges to lend money cbas fiscal 2023 nim was up 17 basis points on the previous year to 207 but fell 5 basis points in 2h from 1h margins increased yearonyear due to the rising interest rate environment partly offset by the impact of increased competition particularly in home lending monthly spot margins peaked in late 2022 said cba on deposits cba said it continued to satisfy a significant portion of its funding requirements from customer deposits accounting for 75 of total funding with increases from retail business and institutional customers cba reported growth across core units with retail banking services cash earnings of a516 billion up from a491 billion the previous year business banking cash earnings were a397 billion up from a301 billion but institutional banking and markets earnings were a103 billion down 3 from a105 billion the previous year comyn said the lender was seeing consumer demand moderate and economic growth slow we are closely monitoring the impact of reduced discretionary spend particularly on our small and mediumsized business customers he said directors of the company declared a final dividend of a240 a share up from a210 last year the banks closely watched common equity tier 1 capital ratio a key measure of a banks ability to withstand financial shocks was 122 at the end of june up 10 basis points since the end of december the lender said due to its strong capital position it planned to launch a further a1 billion on market share buyback across fiscal 2024 subject to market conditions on completion cba said the banks cet1 ratio is expected to reduce by approximately 20 basis points