Commbank posts solid half but wealth still problematic
The Commonwealth Bank has reported a solid half year result with net profit after tax increasing by six per cent to $4,895 million but with its wealth management business continue generate mixed results.
The directors declared an interim dividend of $1.99 per share, up one cent.
Within the wealth management division cash net profit after tax was down 34 per cent when compared to the same time last year, but up six per cent on the previous quarter.
The division analysis released to the Australian Securities Exchange (ASX) said the result was driven by an 11 per cent decrease in total operating income, higher operating expenses and lower investment experience.
Once again the bank's insurance business proved problematic, with the analysis pointing to insurance income being down 33 per cent "with strong growth in general insurance income offset by a significantly lower life insurance result".
It said wholesale life insurance income decreased slightly reflecting higher claims experience, partly offset by benefits of new business while retail life income decreased due to higher claims experience added that, in addition, "an increase in income protection claims reserves resulted in loss recognition of $90 million".
The wealth management result also pointed to the continuing cost of the bank's advice remediation program noting that "funds under advice (FUA) margins declined due to provisioning for advice customer remediation costs while underlying platform costs remained stable".
The divisional analysis also pointed to operating expenses increasing by three per cent driven by increased investment spend, and higher compliance and remediation program costs, partly offset by the benefit of a higher Australian dollar.
On the positive side of the ledger for wealth management, average FUA increased three per cent to $138 billion with the FirstChoice and Custom Solutions platform experiencing continued growth of four per cent and 11 per cent respectively in average FUA.
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