CBA cash profit jumps 54% to $2.9b
February 9, 2010
Commonwealth Bank of Australia (CBA) reported a cash profit of $2.9bn for the six months to 31 December. Looking to the second half of the year the bank said it predicts loan impairments had peaked, however its customers still faced economic uncertainty, which could affect the banks result.
Group CEO Ralph Norris said Australia appeared to be on the slow road to economic recovery.
"That is likely to bring with it a gradual improvement in demand for credit in the 2010 calendar year accompanied by continued upward pressure on our funding costs.
Commneting on the results group Mr Norris said it was a good result when so many financial companies across the world had suffered in the face of the global financial crisis.
“Today’s result demonstrates the resilience of our business model and the underlying strength of each of our businesses,” Mr Norris said.
”As a result we are entering 2010 in a strong position - well placed to continue to meet our customer’s needs through excelling in customer service and generating superior returns for our shareholders.”
Mr Norris said the good result of the bank was attributable to ‘sensible’ acquisitions, such as BankWest.
”Our unrelenting focus, over the last 3 years, on our customers and our people has driven significant improvements right across the Group,” Mr Norris added.
BankWest was picked up during the global financial crisis, with many of the normal regulatory hurdles being side-stepped.
Turning to the results for the half year to 31 December, statutory profit came in at $2.914 billion, while cash earnings per share jumped 42% to $1.917 compared to the half year to December 2008.
Looking across the businesses divisions, Retail Banking Services’ cash profit for the half year was $1.245 billion, an 11% jump from the prior corresponding period.
Meanwhile, the decline in interest rates and the flow on effect in the housing market helped the bank saw home loan income jumped by nearly half to $1.19 billion.
Business and Private Banking profit surged 18% to $440 million.
”This result reflects a strong operating performance with total banking income increasing 13%, and all segments of the business delivering double digit income growth,” the bank said in a statement.
Wealth Management was buoyed by a 17% increase in funds under administration to $186 billion.
Commonwealth Bank said its BankWest division was getting stronger, chipping in to the final result with a cash profit of $64 million.
Looking to the future, Mr Norris said conditions would improve.
“Over the last six months the outlook for the global and domestic economy has improved to the extent that Australia now appears to be on the road to a sustainable economic recovery,” Mr Norris said.
”That is likely to bring with it a gradual improvement in demand for credit in the 2010 calendar year accompanied by continued upward pressure on our funding costs.”
Mr Norris said that impairment expenses would only slowly reduce, rather than fall dramatically, as the economic recovery still presented uncertainty for its customers.
"Clearly, there is still some uncertainty about the speed of recovery for the global economy and, perhaps more importantly, for Australia, the performance of our major trading partners notably China and the United States,” Mr Norris said.
“As a result of these factors, and the uncertainty surrounding the outcome of initiatives by global regulators around banking sector capital and liquidity, the Group plans to retain its current conservative capital and liquidity settings for the foreseeable future,” Mr Norris concluded.
The board declared a dividend of $1.20 per share, up 6%, bringing its payout ratio to pre financial crisis levels.
At the close Tuesday, Commonwealth Bank shares were trading at $52.72.
Group CEO Ralph Norris said Australia appeared to be on the slow road to economic recovery.
"That is likely to bring with it a gradual improvement in demand for credit in the 2010 calendar year accompanied by continued upward pressure on our funding costs.
Commneting on the results group Mr Norris said it was a good result when so many financial companies across the world had suffered in the face of the global financial crisis.
“Today’s result demonstrates the resilience of our business model and the underlying strength of each of our businesses,” Mr Norris said.
”As a result we are entering 2010 in a strong position - well placed to continue to meet our customer’s needs through excelling in customer service and generating superior returns for our shareholders.”
Mr Norris said the good result of the bank was attributable to ‘sensible’ acquisitions, such as BankWest.
”Our unrelenting focus, over the last 3 years, on our customers and our people has driven significant improvements right across the Group,” Mr Norris added.
BankWest was picked up during the global financial crisis, with many of the normal regulatory hurdles being side-stepped.
Turning to the results for the half year to 31 December, statutory profit came in at $2.914 billion, while cash earnings per share jumped 42% to $1.917 compared to the half year to December 2008.
Looking across the businesses divisions, Retail Banking Services’ cash profit for the half year was $1.245 billion, an 11% jump from the prior corresponding period.
Meanwhile, the decline in interest rates and the flow on effect in the housing market helped the bank saw home loan income jumped by nearly half to $1.19 billion.
Business and Private Banking profit surged 18% to $440 million.
”This result reflects a strong operating performance with total banking income increasing 13%, and all segments of the business delivering double digit income growth,” the bank said in a statement.
Wealth Management was buoyed by a 17% increase in funds under administration to $186 billion.
Commonwealth Bank said its BankWest division was getting stronger, chipping in to the final result with a cash profit of $64 million.
Looking to the future, Mr Norris said conditions would improve.
“Over the last six months the outlook for the global and domestic economy has improved to the extent that Australia now appears to be on the road to a sustainable economic recovery,” Mr Norris said.
”That is likely to bring with it a gradual improvement in demand for credit in the 2010 calendar year accompanied by continued upward pressure on our funding costs.”
Mr Norris said that impairment expenses would only slowly reduce, rather than fall dramatically, as the economic recovery still presented uncertainty for its customers.
"Clearly, there is still some uncertainty about the speed of recovery for the global economy and, perhaps more importantly, for Australia, the performance of our major trading partners notably China and the United States,” Mr Norris said.
“As a result of these factors, and the uncertainty surrounding the outcome of initiatives by global regulators around banking sector capital and liquidity, the Group plans to retain its current conservative capital and liquidity settings for the foreseeable future,” Mr Norris concluded.
The board declared a dividend of $1.20 per share, up 6%, bringing its payout ratio to pre financial crisis levels.
At the close Tuesday, Commonwealth Bank shares were trading at $52.72.
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