The Commonwealth Bank of Australia (CBA), boosted by an outperforming funds management division and solid growth in home loans and other personal and business lending, has posted a half yearly net profit after tax of $1.76 billion today – up 42 per cent on the corresponding period for December 2003.
Net profit after tax in the group’s banking division was up 10 per cent to $1.43 billion for the six months ending December 2004 when compared to 2003, however this was eclipsed by a significant rise in the margins within its funds management business.
Underlying net profit in this division rose 35 per cent on second half figures for 2003 to $170 million – a 15 per cent jump also on the $148 million in net profit the area delivered for the period ending June 2004.
CBA chief executive David Murray claimed the solid funds management performance “was the result of strong revenue, offset by moderate expense growth compared to the last half, but a decline in expenses compared with the previous corresponding period”.
Murray was also pleased with the reception the market gave its enhancements to Colonial First State’s (CFS) FirstChoice platform, which sucked in more than $5 billion for the 12 months ending December 2004. Murray also remained positive about the ongoing work the group was doing to address performance across a number of CFS funds.
“With a large fund, it is hard to turn around the performance quickly. We said that we would address this issue in a patient manner, and we have been actively managing it,” he said.
The head of the country’s largest retail bank also believed the market-anticipated strong performance was partly driven by the ‘Which new Bank’ initiative beginning to pay off, along with strong performance across both its Australian and New Zealand operations.
“We have met all our critical Which new Bank milestones for the period, and we have seen productivity improvements in all businesses, driven by increasing revenue and flat costs,” Murray said.
