Shares of the country’s largest lender are down more than 15% from a record high in June.

Commonwealth Bank of Australia’s (CBA) first-half profit topped estimates, buoyed by growth in its flagship mortgage business and a push in lending more to companies.

Cash profit from continuing operations came in at A$5.45 billion (US$3.88 billion) in the six months ended Dec 31, according to a statement.

Shares of the country’s largest lender are down more than 15 per cent from a record high in June amid concerns that valuations became too stretched. Australian banks are contending with a dip in consumer sentiment after the Reserve Bank of Australia became the first major monetary authority to hike its key interest rate to control inflation.  

“Inflation is now expected to remain above the Reserve Bank of Australia’s target band for some time, placing further upward pressure on interest rates,” chief executive officer Matt Comyn said. “We will continue to seek to support our customers with their financial resilience.”

The firm’s net interest margin dipped 4 basis points to 2.04 per cent due to competition in mortgages as well as lower income from treasury and markets.

Expenses climbed 5 per cent to A$6.7(US $4,77)  billion, driven by inflation and increased investment in technology. CBA is pushing spending in its tech infrastructure to develop its generative artificial intelligence capabilities and increase cybersecurity defences.

CBA’s business lending division has been growing faster than the industry in this area as the lender seeks to win market share from rivals, including National Australia Bank. Meantime, its flagship home lending division – the firm’s biggest – saw retail transaction accounts continue to grow.

“We continue to watch the competitive intensity and its implications across the financial system,” Comyn said. “We are well placed to compete effectively and will continue to adjust our settings as appropriate.”

Sydney-based CBA will pay an interim dividend of A$2.35 per share, maintaining a dividend payout ratio of around 74 per cent.