That said, the environment in which Australian banks are operating is extremely difficult and their prospects for meaningful earnings improvement this year or next are close to non-existent. But what is equally clear is that CBA has succeeded in putting daylight between its own performance and that of its three large rivals, Westpac, National Australia Bank and ANZ. Loading Replay Replay video Play video Play video One of CBA’s most notable achievements in the half to December is that its net interest margin actually improved slightly – most expected the margin to decline as the Reserve Bank lowered interest rates a couple of times during that six-month period. Its timing in passing on the rate cuts to customers helped CBA, but ultimately banks can’t outrun falling rates.

Comyn concedes that holding this margin is not sustainable and forecasts the net interest margin will fall in the full 2020 year and in 2021. He also notes that the RBA’s bias on rates is still towards easing – so he knows, or at least anticipates, it's going to get harder still. The earnings repercussions for falling interest rates are largely outside the control of banks. Comyn said it would be hard to offset the net interest income reduction in future. It appears the market is valuing CBA more as a growth business than one operating in an industry with significant headwinds. But looking at the factors that the CBA can control, it has scored well. It's taken the bank a few years, but those hefty remediation costs to customers have now largely washed through the system and their drag on earnings seems to have gone.

The bank also managed to snare strong deposit growth of 9 per cent and experienced strong trading income. Its market share in deposits now stands at 26.8 per cent - well ahead of its closest rival at 22 per cent. All these factors helped contain the overall decline in profit to 4 per cent and allowed it to keep dividends at $2 per share. Indeed, the result would have been even better had it not been for CBA's bushfire-impacted general insurance business and a $100 million loan impairment overlay - this time relating to customers impacted by bushfires. How much longer CBA will remain in general insurance business remains to be seen. In an environment where the impacts of global warming are producing an increasing number of natural catastrophes it’s not surprising that CBA is undertaking a strategic review around the ownership of this business. Reading between the lines of Comyn’s comments, it’s a matter of when, not if or how CBA will get out of general insurance.

The overwhelming impression from CBA’s latest set of numbers and commentary is that Comyn has successfully rid the bank of peripheral assets and invested in its core business of retail banking. Loading CBA is further ahead of its main peers in the post-royal commission clean-up and continues to cement its technology lead. And it clearly has market share momentum in mortgages and deposits – which will make catch-up all the more difficult for its rivals. But even after this is all factored in, the banking sector is stuck in a low credit growth environment and subject to risks of increased regulation and a further lowering of interest rates. Yet judging by its share price performance, it appears the market is valuing CBA more as a growth business than one operating in an industry with significant headwinds.