Lenders continue to report improving credit quality, despite rising rates and inflationary pressure.

Commonwealth Bank released a September quarter update and Pillar 3 report yesterday, highlighting lower arrears in all areas of its lending business.

Home loan arrears (overdue by 90 days or more) fell 3 basis points during the quarter to 46 bps of the book, personal loan arrears fell 14 bps to 88 bps and credit card arrears fell 8 bps to 44 bps.

The value of corporate, SME and specialist lending arrears fell from A$591 million in June to $563 million at the end of September.

The bank said the good credit performance was underpinned by low levels of unemployment.

Troublesome and impaired assets fell from 48 bps to 45 bps of total committed exposures.

CBA reported net profit of around $2.7 billion for the September quarter ($2.5 billion on a cash basis) – an increase of 2 per cent on the quarterly average for the June half-year.

Income was up 9 per cent, driven by higher margins and volume growth. The bank did not report the change in its net interest margin.

Operating expenses increased by around 4 per cent (4.5 per cent if a reduction in remediation costs is excluded).

The bank focused on improving its margin and grew home lending and household deposits below system.

Business lending, on the other hand, grew by 12.6 per cent annualised over the quarter – 1.2 times system.