The country’s biggest lender on Wednesday reported a cash profit of $5.15 billion for the six months to December 31, a nine per cent increase from the year earlier and in line with analyst predictions.

Its statutory bottom-line result was up 10 per cent to $5.22b.

Chief executive Matt Comyn attributed the stronger result to growth in lending volumes and a recovery in margins as interest rates rose from historic lows.

“Our continued balance sheet strength and capital position creates flexibility to support our customers and manage potential economic headwinds, while delivering predictable and sustainable returns to shareholders,” he said in a statement.

The profit surge comes as banks move to relinquish their physical branch assets en masse, earning them the anger of local customers, councils, MPs and federal senators who have launched an inquiry into the closures and their impact on rural and regional communities.

Westpac has committed to closing 20 branches in rural and suburban locations across four states in coming months, including north Queensland outlets in Ingham, Tully and Cloncurry.

Senate Rural and Regional Affairs and Transport committee chair Senator Matt Canavan has asked banks to halt closures to allow the inquiry to investigate and convey its findings.

The Commonwealth Bank has complied with that request in good faith, halting shutdowns for the length of the Senate inquiry, including in the NSW Riverina town of Junee which was due to lose its last branch in March.

Westpac has not followed suit, with a spokesperson attributing the latest round of closures to the declining use of branches and its decision to bolster online services.

Other banks, including ANZ and NAB, have not indicated whether they will halt closures.

Commonwealth Bank’s operating income for the first half of the year jumped 12 per cent to $13.59b largely driven by growth in home and business lending.

Net interest margin, or the cost of funding loans compared with what the bank charges, climbed 23 basis points from the previous six month period to 2.1 per cent amid a sharp increase in interest rates.

Operating expenses rose five per cent to $5.8b on the back of more staff and technology spending, while the lender also increased provisions for bad loans by $586 million.

The Reserve Bank of Australia last week lifted its benchmark cash rate for the ninth time to 3.35 per cent, a move that is expected to put pressure on borrowers.

“We are conscious that many Australian households are feeling significant strain from rising interest rates, alongside the rising costs of electricity, groceries and other household items,”  Comyn said.

“Despite this, consumer spend remains resilient, with signs of spend slowing in pockets.”

The bank has signalled optimism about the outlook, saying the fundamentals of the economy remain solid, with low unemployment, strong exports, and returning migration.

“We expect business credit growth to moderate and global economic growth to slow during 2023,” Comyn said.

“However, we remain optimistic that a soft landing for the Australian economy can be achieved and positive on the medium term outlook for Australia.”

CBA says its capital position remains strong with a Common Equity Tier 1 capital ratio of 11.4 per cent at December end, promoting the bank to increase its on-market share buyback by an additional $1b.

It will also pay a fully franked interim dividend $2.10 per share, an increase of 20 per cent from a year ago.