CBA on track for record profit
(9 February 2010 – Australia) Commonwealth Bank has posted a statutory net profit of A$3.05 billion for the six months to December 2010, attributed largely to business lending, beating most analysts’ expectations.
Cash profit for the period came in at a record $3.3 billion, due to an increase in lending volumes and better margins on deposits.
CBA’s flagship retail banking business increased cash profit by 12 percent to A$1.38 billion and its business banking unit, which looks after small to mid-sized businesses, delivered a 15 percent lift in cash profit to A$506 million.
Bad debts fell by 48 percent to A$722 million.
Chief executive Ralph Norris says the healthy result came despite challenging lending conditions.
'All of our businesses have performed well during a period characterised by subdued credit growth and intense competition,' he said in a statement.
However, Mr Norris said, 'Underlying credit growth remains subdued with both consumer and corporate confidence fragile,' he said.
'Competition is intense with depositors benefiting from historically high margins while wholesale funding costs also remain at elevated levels.'
"CBA in much of our market monitoring has, and, is showing clear traction in the underlying drivers of revenue in business banking", commented East & Partners’ Principal Analyst, Paul Dowling.
" The customer experience is stabilising, real product competency is coming down from the Bank’s institutional segment into middle market and SME markets and risk/margin driven re-pricing of their lending book has been achieved in a ‘gentler’ process to much of their competition. It looks to be a case of the sleeping giant in middle market and SME banking is finally waking up and monetising a unique footprint", he added
CBA’s flagship retail banking business increased cash profit by 12 percent to A$1.38 billion and its business banking unit, which looks after small to mid-sized businesses, delivered a 15 percent lift in cash profit to A$506 million.
Bad debts fell by 48 percent to A$722 million.
Chief executive Ralph Norris says the healthy result came despite challenging lending conditions.
'All of our businesses have performed well during a period characterised by subdued credit growth and intense competition,' he said in a statement.
However, Mr Norris said, 'Underlying credit growth remains subdued with both consumer and corporate confidence fragile,' he said.
'Competition is intense with depositors benefiting from historically high margins while wholesale funding costs also remain at elevated levels.'
"CBA in much of our market monitoring has, and, is showing clear traction in the underlying drivers of revenue in business banking", commented East & Partners’ Principal Analyst, Paul Dowling.
" The customer experience is stabilising, real product competency is coming down from the Bank’s institutional segment into middle market and SME markets and risk/margin driven re-pricing of their lending book has been achieved in a ‘gentler’ process to much of their competition. It looks to be a case of the sleeping giant in middle market and SME banking is finally waking up and monetising a unique footprint", he added
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