Comm Bank reports massive 54 per cent jump in first half cash profit

Thursday February 11, 2010

Commonwealth Bank of Australia has reported its cash net profit jumped by 54 per cent to $2.943 billion from $2.013 billion, saying that its execution of key strategic priorities is the cause.

Other results within the report include:

• Net Profit After Tax (NPAT) up 36 per cent to $2,914 million
• first half profit rose by 13 per cent from $2.573 billion to $2.914 billion
• income growth in the banking business with net interest income rose 19 per cent
• lending balances with average interest earning assets up $51 billion to $547 billion

The bank has attributed much of its earnings to smart investing decisions which saw CBA invest over $1 billion in several initiatives designed to improve customer banking experiences and raise productivity over the last twelve months. Within this the largest investment was the four year Core Banking Modernisation which is at the half way point and reportedly "on schedule...and will achieve a number of key milestones this year including migration of all deposit and transaction accounts to the new system."

Ralph Norris, Group Chief Executive Officer, stated in a release accompanying the results that the bank believes that its results show its strength and resilience during a time when many of the banking industry's global peers were struggling from the Global Financial Crisis.

"Today's result demonstrates the resilience of our business model and the underlying strength of each of our businesses. As a result we are entering 2010 in a strong position." Mr Norris stated.

"A particularly pleasing aspect of the result has been the extent to which our business has benefitted from the successful execution of our five strategic priorities.

"Our unrelenting focus, over the last 3 years, on our customers and our people has driven significant improvements right across the Group while our ongoing investment in process enhancement and systems improvement has delivered material increases in productivity.

"Our disciplined approach to growth has also enabled us to acquire a number of excellent businesses (including BankWest) at sensible prices which have further strengthened our domestic franchise."

Speaking of BankWest, the bank brand has also performed well with a cash net profit of $64 million which is a remarkable increase from the $110 million loss recorded in the prior comparative period.

Other BankWest results included:

• Lending asset balances up 11 per cent
  
• Deposit balances up 5 per cent
  
• Home loans income increased 49 per cent to $1.190 billion
• Business and private banking up 18 per cent to a cash net profit of $440 million

Overall the Commonwealth Bank is optimistic about its future according to Mr Norris who stated that the recovering national economy appears sustainable.

"That is likely to bring with it a gradual improvement in demand for credit in the 2010 calendar year accompanied by continued upward pressure on our funding costs.

However Mr Norris was quick to point out that there are some risks still present with customers still finding it economic conditions challenging.

"There are still some risks from international volatility which could affect shirt 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," he said.

"As a result of these factors, and the uncertainty surrounding the outcome of initiatives by global regulators around banking sector capital and liquidity, the Group plans to retain its current conservative capital and liquidity settings for the foreseeable future." Mr Norris stated.

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