In the first hour of trading on Wednesday, Commonwealth Bank shares had dropped 8.1 per cent to $157.87, their lowest level since early February.
The move came after CBA announced it had turned a $2.7 billion cash profit in the March quarter, up four per cent from a year ago but down one per cent from its first-half quarterly average.
The unaudited figures are about two per cent below forecasts, Citi analysts wrote in a report, although this was driven by a modest top-up in credit provisioning, the buffer that banks set aside to protect from loan defaults.
"Notwithstanding an already strong level of provisioning, we have chosen to further top up our collective provisions in the quarter to reflect heightened macroeconomic risks," chief executive Matt Comyn said.
"Our deliberate and long-term approach to balance sheet settings enables us to support our customers and the economy."
CBA said it had increased its collective provisions by $200 million, as the bank revised its macroeconomic forecasts and increased its weighting of a downside scenario for Australia's economy.
The country's other major banks have also set aside more cash for credit provisioning to protect from a potential increase in bad debts caused by fallout from supply chain disruptions and higher fuel costs stemming from the US-Israeli war with Iran. NAB set aside $300 million and Westpac around $445 million.
Commonwealth Bank's actual loan losses have thus far been small.
Just $6.5 billion in corporate lending was flagged as "troublesome and non-performing," as of March 31, representing 0.94 per cent of its total committed exposure.
That's slightly more than the $6.1 billion in the December quarter, but less than the $6.6 billion a year ago.
In retail lending, the percentage of consumers more than 90 days behind on their personal loans grew to 1.71 per cent, their highest level in since before the pandemic, but CBA said this reflected deliberate decisions by the bank involving credit, pricing and acquisition mix.
The percentage of consumers behind on their home loans and credit cards remained low and broadly stable from previous quarters, at 0.69 per cent and 0.68 per cent, respectively.
Australia's economy was demonstrating resilience, but supply chain disruptions, higher prices and interest rates are expected to weigh on household spending and business activity, Mr Comyn said.
"We will continue to adjust our settings as appropriate and remain focused on executing our strategy," he said.
The bank said its operating income was flat in the three months to March 31 and underlying net interest margin was broadly stable.
CBA spent $3.36 billion on operating expenses, up one per cent from it did on average in the first half, reflecting higher cloud computing volumes and software licensing and investment in AI capabilities.
CBA gained market share in business lending and household deposits during the quarter, while its growth in home lending kept pace with the market.
It added 170,000 new retail transaction accounts in the quarter, driven mostly by customers new to the bank.
