A strong performance by its Wealth Management division has helped drive the Commonwealth Bank to a strong half-year statutory net profit after tax of $4,895 million, notwithstanding the company having to provision more than $500 million for its AUSTRAC legal exposures and client remediation.
But the outstanding performance of the big banking group’s Wealth Management division was driven in large part by the balance-sheet impact of its decision to sell its Comminsure business to AIA Australia.
The Wealth Management division reported a 51 per cent increase in tax net profit after tax to $375 million with the impact of the yet to be completed Comminsure sale being reflected in the company’s statement that “excluding contribution from the Comminsure Life Business (discontinued operations), cash net profit after tax was $281 million, a 33 per cent increase on the prior comparative period”.
The divisional commentary said the result had been driven by strong growth in funds management income and lower operating expenses partly offset by lower insurance income.
Funds management income was up 10 per cent to $987 million with average assets under management increasing by nine per cent to $220 billion.
The bank’s platform businesses continued to perform well with Colonial First State FirstChoice and CFSWrap experiencing continued growth in average funds under advice (FUA) of nine per cent and 19 per cent respectively.
While clearly pleased about the increased profit result, the tone of the Commonwealth Bank announcement to the Australian Securities Exchange was subdued with chief executive, Ian Narev, using his final results commentary to point to the fact that the bank had “focused a great deal of effort on fixing our mistakes and becoming a better bank”.
Narev noted a $375 million expense provision to cover the AUSTRAC proceedings and the bank also noted a $200 million expense provision for “expected regulatory, compliance and remediation program costs.” The CEO also noted though that the bank had increased its dividend “even whilst providing for these costs”.
The company declared a dividend of $2 per share.