Despite estimated cash earnings of $1.75 billion for the first three months of its financial year, the Commonwealth Bank of Australia (CBA) is not very optimistic on its outlook for the months ahead due to the challenging operating conditions.

For the same period in 2010, the bank had cash earnings of $1.6 billion against an average of $1.8 billion forecast by six analysts.

"The global economic recovery remains fragile, highlighted by ongoing sovereign debt concerns in the eurozone and an uncertain growth outlook in the U.S.," said CBA Chief Executive Ralph Norris.

"Whilst the Australian economy continues to perform relatively well, consumer and business confidence remains fragile, most noticeably reflected in subdued system credit growth," he added.

However, in spite of the challenging business environment, Mr Norris said CBA turned in solid financial outcomes and improved customer satisfaction scores. He attributed these to retention of the bank's conservative business approach which resulted in capital, provisioning, funding and liquidity levels remaining robust.

Given these developments, first quarter revenue growth trends were consistent with targets set by the bank in August, but market volatility led to Q1 trading income $60 million below long-term average.

CBA logged bad debt charges of $256 million in the quarter and Tier I capital, which measures the bank's ability to absorb losses, at 9.85 per cent, down from 10.01 per cent in June. The bank explained the lower Tier 1 ratio to weaker corporate lending growth, higher levels of liquid assets and the impact of foreign exchange.

Even if CBA shares had fallen 3.6 per cent so far in 2011, it continued to outperform the broader market and is considered the second-best performer among top Australian banks.

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