Wealth management bolsters CommBank

A strong performance by its wealth management division has helped the Commonwealth Bank report a 20 per cent increase in net profit after tax to $5,664 million for the last financial year.

The big banking group announced to the Australian Securities Exchange today that shareholders would be rewarded with a final dividend of $1.70 – up 48 per cent from the previous year.

Dealing with its wealth management division, the bank reported that underlying profit after tax had increased 15 per cent to $592 million driven by solid growth in underlying volumes and improved markets.

It said that funds under administration had increased 6 per cent to $180 billion as at 30 June, with net outflows of $3 billion reflecting the loss of lower margin short-term cash mandates from institutional investors.

Dealing with Colonial First State, the bank’s balance sheet revealed that underlying profit after tax rose by 69 per cent to $147 million driven by improved net flows and market conditions, with CommInsure also performing well despite conditions in the life business being described as relatively stable.

Commenting on the result, Commonwealth Bank chief executive Ralph Norris described it as good and reflective of the bank’s strength and resilience.

Looking at prospects for 2011, Norris said that despite some improvement, the global recovery remained uneven and concerns about the advanced economies balanced out the strength being seen in the emerging economies.

He said it was appropriate to maintain a degree of caution about the prospects for the bank’s business in the coming year and that it would be retaining conservative capital and liquidity settings for the foreseeable future.