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Commonwealth Bank of Australia (CBA) chief executive Ralph Norris has delivered a cautious outlook for the economy while pointing to the recovery of the bank’s key divisions in interim results released today.
In its interim results for the six months to December 31, 2009, CBA posted a net profit after tax of $2,914 million — a 36 per cent increase on the prior period.
The result was supported by improved earnings from the bank’s wealth management division and strong growth in both retail and business lending, the bank’s statement to the Australian Securities Exchange stated.
Wealth management net profit was $379 million, primarily due to improved investment markets, including the unwinding of unrealised mark-to-market losses in the group’s guaranteed annuities portfolio.
Funds under administration were up 17 per cent for the six months to December 31 to $186 billion, while CommInsure recorded an increase in in-force premiums of 4 per cent to $1.5 billion.
Commenting on the result, Norris said CBA’s “disciplined approach to growth” had enabled it to acquire “a number of excellent businesses (including Bankwest) at sensible prices”.
He added that there remain “risks from international volatility” which could affect the bank’s short-term performance.
“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.”
Norris also said while “it appears that loan impairment expense has peaked”, CBA expects reductions to impairment expenses in 2010 will be “gradual rather than dramatic” with conditions remaining challenging.
