Ratings agencies were happy with the Commonwealth Bank's (ASX:CBA) full-year result, which showed that the long-predicted cliff of bad debts from high mortgage rates and stretched borrowers again failed to appear.

For example, Moody's Ratings said in a short note on Wednesday that despite the dip in earnings, "CBA's strong credit profile continues to be underpinned by the strength of its balance sheet."

"At 12.3%, the bank's common equity tier 1 ratio is well above the regulatory minimum of 10.25%. Asset quality remains healthy, and while home loan arrears rose to 65 basis points from 47 basis points, they remain in line with pre-COVID levels."

The small dip in operating income (revenue) for the 12 months ended 30 June to $27.174 billion was due to the small decline in revenues from its Australian retail banking and New Zealand operations, which offset income growth from its business and institutional operations (which were the stars of the result).

CBA's key Retail Banking division saw a 3% fall in income to $12.790 billion due to lower margins from competition from other home lenders and an unfavourable deposit mix, partly offset by volume growth. The New Zealand division reported a 5% fall in income for similar reasons.

The performance of the CBA's Business Banking division was solid, with a 4% increase in income to $8.573 billion reflecting volume growth, partly offset by lower margins due to increased competition.

It was a similar story for its Institutional Banking division, which saw a 3% lift in income to $2.506 billion, due to higher deposits income, higher equity earnings, and a favourable asset mix, partly offset by lower lending and leasing margins.

CBA's operating expenses rose 3% in FY 2024 due to higher inflation impacting staff costs, additional technology spending to support the delivery of strategic priorities ($2 billion in total), and lower one-off items.

NIM was down 8 basis points to 1.99% over 2023-24 but steadied in the second half and edged up 1 basis point half on half.

CBA said that its loan impairment expense decreased 28% year on year in FY 2024. This reflects its robust credit origination and underwriting practices, rising house prices, and lower expected losses within consumer finance.

However, consumer arrears increased due to the impact of higher interest rates and cost of living pressures on some borrowers. Nevertheless, its home lending portfolio remains well-secured, and the majority of home lending customers remain in advance of scheduled repayments.

Provision coverage remains strong at 1.66% of credit risk-weighted assets, and the CBA maintains a buffer of around $2 billion above forecast losses expected under its central economic scenario.

But the third-quarter update on Friday from the National Australia Bank was a slightly different story in terms of its reception, with investors pointing to the flat result and rise in arrears.

That was an odd view because they had warmly greeted a similar report from the CBA on Wednesday.

The NAB reported a dip in cash earnings to $1.75 billion for the June quarter, which shouldn't have been that big a surprise. Statutory profit came in at $1.9 billion, and the bank's capital position at 12.6% was slightly stronger than the CBA's 12.3%.

The arrears and bad debt concerns were no worse than the CBA's estimates, and the NAB, like its larger rival, maintains a healthy buffer over the losses estimated in its central economic forecast.