CFS and CommInsure challenged in CommBank result
The Commonwealth Bank has recorded a healthy full-year result with statutory net profit after tax rising 13 per cent to $6,394 million, but its wealth management divisions have struggled in difficult market conditions.
Announcing the result to the Australian Securities Exchange today, Commonwealth Bank chief executive, Ralph Norris, described it as "a good, solid result in what has been a difficult year".
However, the challenges facing the wealth management industry were made evident in the result, with its wealth management profit down 9 per cent over the previous year and with CommInsure, in particular, facing challenges.
While the Commonwealth's analysis pointed out that underlying profit after tax for its wealth management division was up marginally, cash net profit was actually down by 9 per cent "mainly due to the unwinding of mark to market losses on the Guaranteed Annuities portfolio in the prior years".
It said that Colonial First State had recorded a one per cent decline in cash net profit after tax, while CommInsure recorded a 20 per cent decline in cash net profit after tax, with net underlying profit after tax down 11 per cent.
The brighter note was provided by Colonial First State Global Asset Management which recorded a 6 per cent increase in cash net profit after tax.
CommInsure managing director Paul Rayson said CommInsure's full year result represented a combination of a growing insurance business and an investment business in long-term run off.
"Importantly, the benefits of structural changes to the business and enhancements to our products are beginning to be realised," he said. "In particular, the improved flexibility and affordability of our insurance policies is expected to deliver further improvements for our operations in the 2012 financial year."
The bank also pointed to its cautious approach to the year ahead, saying that in recognition of the continued uncertainty in the economic and regulatory outlook, it had elected to retain high levels of liquidity, standing at $101 billion as at 30 June.
Looking over the horizon, Norris said that ongoing offshore instability continued to impact the domestic economy, and had the potential to place further upward pressure on wholesale funding costs for domestic banks.
AUTHOR
Mike Taylor
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