CBA claims improved outlook
(19 January 2010 – Australia) The Commonwealth Bank has forecast a continuation of the momentum the bank reported in its last trading update as the group predicts their first-half net profit to be above analysts estimates.
The nation’s biggest home lender announced last week that it expects to achieve an unaudited cash net profit after tax of A$2.9 billion for the half year ended 31 December 2009. Analysts for the group had forecast the result to be A$2.7 billion.
The bank attributed the increase to solid income growth across its banking business, a disciplined approach to cost management and a decline in impairment expenses.
The Commonwealth also said that the earnings were boosted by improved equity markets, with a A$240 million ‘turnaround’ in investment experience.
The group’s cash profit for the corresponding period a year ago was A$2.01 billion.
The improved outlook comes as banks are still unpopular amongst consumers for the last round of interest rate hikes.
CBA came in almost unnoticed behind the Westpac storm raising its interest rates 12 points above the RBA official decision.
Analysts are still warning not to take the CBA update as a proxy for what is going on in the rest of the banking sector.
James Ellis, analyst for Credit Suisse, told the Sydney Morning Herald that the bulk of the upgrade was a result of a turnaround in fund management returns. Specifically these were ‘lower quality’ mark-to-market gains within the bank’s guaranteed annuities portfolio.
With CBA, AMP and Challenger the key participants in this market, analysts see little read-through on this point for the bank sector, Mr Ellis continued.
The bank is due to announce its full results on the 10th February.
The bank attributed the increase to solid income growth across its banking business, a disciplined approach to cost management and a decline in impairment expenses.
The Commonwealth also said that the earnings were boosted by improved equity markets, with a A$240 million ‘turnaround’ in investment experience.
The group’s cash profit for the corresponding period a year ago was A$2.01 billion.
The improved outlook comes as banks are still unpopular amongst consumers for the last round of interest rate hikes.
CBA came in almost unnoticed behind the Westpac storm raising its interest rates 12 points above the RBA official decision.
Analysts are still warning not to take the CBA update as a proxy for what is going on in the rest of the banking sector.
James Ellis, analyst for Credit Suisse, told the Sydney Morning Herald that the bulk of the upgrade was a result of a turnaround in fund management returns. Specifically these were ‘lower quality’ mark-to-market gains within the bank’s guaranteed annuities portfolio.
With CBA, AMP and Challenger the key participants in this market, analysts see little read-through on this point for the bank sector, Mr Ellis continued.
The bank is due to announce its full results on the 10th February.
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