The Commonwealth Bank has posted a net profit after tax of $2.012 billion, a drop of 24 per cent from last year, with funds management doing little to boost the bank’s result, with a drop in net profit of $132 million for the financial year.
The wealth management business of the bank,Colonial First State(CFS), posted a $228 million net profit after tax, down 37 per cent from last year’s figure of $360 million and had its carrying value written down by $245 million.
CFS also suffered an 8 per cent fall in operating profit to $94.21 million and a decline of $8 billion or 8 per cent in funds under management to $94 billion at 30 June.
According to the bank’s financial statements the drop was made up of $4 billion in outflows, investment losses of $1 billion and net disposals of $3 billion.
In announcing the results Commonwealth chief executive David Murray says the performance of the wealth management division was linked to lower average funds under management.
This came about due to weaknesses in investment markets and a preference by retail investors to move into cash-based products and property for much of the last financial year.
The group also says the changes in senior management at CFS earlier this year and the downgrades of some funds by research houses following on from that also added to the lack of inflows into the group.
However the bank’s master trust offering, FirstChoice, attracted $3.2 million until the end of June with 40 per cent of inflows sourced from customers within the branch network. Of that number 60 per cent chose to invest funds in Colonial products.
Also bucking the trend was CommInsure, the life insurance division of the bank which recorded growth in sales through the branch network from 28 per cent last year to 41 per cent this year, which added to the 41 per cent growth in the division’s operating profit over 12 months.
