(Australia) – Comments from Commonwealth Bank chairman John Ralph that the bank faced a period of flat profit growth have undermined the company’s share price, which fell 5.1 percent after Ralph’s speech to the annual general meeting.Ralph told shareholders that first half profit will be flat with last year and, without being more specific, added that it “will be up” after adjusting for restructuring and other costs.
“With restructuring benefits beginning to emerge in the second half, the bank expects modest growth in reported net profit after tax [cash basis],” Mr. Ralph said.
The cash basis figure is before goodwill amortisation and valuation changes to investments in life insurance and fund management units. The bank later declined to say what was meant by “modest,” with chief executive David Murray saying he had no further comment.
Most major stockbroking firms have trimmed their estimates of CBA’s earnings, while ABN Amro changed its recommendation from “hold” to “add.”