Commonwealth Bank of Australia’s first-quarter cash earnings came in slightly better than market expectations on the back of improved volumes in its home lending and household deposits portfolio and buoyant margins amid high interest rates.

Despite deposit price competition and temporary volatility from preparing to repay a large loan from the Reserve Bank of Australia in the second half, CBA’s retail bank saw growth in transaction accounts, up by 121,000, while home loans grew by $8.6 billion.

This was largely driven by new account openings and a focus on customer retention in a competitive environment, CBA said.

CBA, which holds a quarter of the country’s $2.2 trillion mortgage market, logged common equity tier 1 ratio, a measure of spare cash, of 11.8% as at September-end.

CBA cautioned that Australia’s economic growth remains sluggish due to a 12-year high interest rate of 4.35%, which is dampening consumer spending.

“Inflation is moderating, but at a slowing pace, and global geopolitical tensions are creating uncertainty … we remain optimistic on the overall outlook and the Australian economy remains fundamentally sound,” CEO Matt Comyn said in a statement.

While the high interest rate environment helped Australian banks fill their coffers, a price war, fuelled by elevated interest rates and living costs, has forced the lenders to sacrifice their market share or margins to survive.

The country’s biggest lender said its cash net profit after tax was $2.50 billion for the quarter ended September 30, compared with $2.50 billion a year earlier. That compares to a Visible Alpha consensus estimate of $2.48 billion, as per Citi.

Costs went up by 3% during the quarter, mainly because of higher wages, more spending on improvements, and one extra day in the quarter, CBA said.