Positive growth trajectory from first-half profits
(15 February 2013 – Australia) Commonwealth Bank of Australia (CBA) Chief Executive Ian Narev believes the bank’s first half profits have paved the way for a good full year profit.
Analysts are estimating a record profit of more than A$7 billion for the year, after the banks flagship retail banking arm overcame sluggish credit growth to help drive a 6 percent jump in half-year earnings.
As lower interest rates start to stimulate the economy, the nation's biggest bank said it expected to post further solid profit growth on the back of improving confidence among households and business.
But despite wholesale funding costs falling sharply in recent months, Narev played down the chances of banks cutting mortgage rates independently of the Reserve Bank of Australia (RBA), saying overall borrowing costs remained under pressure.
The bank's huge retail business, which provides one in every four home loans in Australia, helped drive the growth by posting a 13 percent jump in profits to A$1.5 billion.
With higher confidence sparking a lift in financial markets and the housing market in recent months, Narev said cuts in interest rates were starting to stimulate the economy.
He expected the recovery to continue gradually throughout the coming year, though he remained cautious about risks from overseas.
''The first six months are a sign that if volatility is down and you start seeing a bit of a rebound in confidence, that's good overall for the performance of the group,'' Narev said. ''If you believe those things will continue to happen, we should be on a good positive growth trajectory.
''We feel good about the momentum of the business, but we've learnt over the last few years that that can change pretty quickly.''
As lower interest rates start to stimulate the economy, the nation's biggest bank said it expected to post further solid profit growth on the back of improving confidence among households and business.
But despite wholesale funding costs falling sharply in recent months, Narev played down the chances of banks cutting mortgage rates independently of the Reserve Bank of Australia (RBA), saying overall borrowing costs remained under pressure.
The bank's huge retail business, which provides one in every four home loans in Australia, helped drive the growth by posting a 13 percent jump in profits to A$1.5 billion.
With higher confidence sparking a lift in financial markets and the housing market in recent months, Narev said cuts in interest rates were starting to stimulate the economy.
He expected the recovery to continue gradually throughout the coming year, though he remained cautious about risks from overseas.
''The first six months are a sign that if volatility is down and you start seeing a bit of a rebound in confidence, that's good overall for the performance of the group,'' Narev said. ''If you believe those things will continue to happen, we should be on a good positive growth trajectory.
''We feel good about the momentum of the business, but we've learnt over the last few years that that can change pretty quickly.''
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