Office employees walk past the Commonwealth Bank building in the central business district of Sydney yesterday.
SYDNEY: The Commonwealth Bank yesterday posted the biggest ever profit by an Australian banking institution, underlining a buoyant financial position despite “mixed” business conditions.
The country’s top home lender said net profit for the 12 months ending June 30 was up eight percent to a record A$7.68bn ($6.98bn), higher than analyst expectations.
Cash profit — which strips out one-off costs — was A$7.81bn, up 10 percent. A final dividend of A$2 per share was declared but this disappointed the market, which was expecting more. As a result the share price, which has risen strongly this year, closed 1.1 percent lower at A$73.73.
Chief executive Ian Narev cited the bank’s focus on productivity and innovation as a factor behind the bumper profits, pointing to the Commonwealth becoming the market leader in customer satisfaction while strengthening its balance sheet.
“This result again highlights the benefits of a multi-year focus on our strategic priorities,” he said.
“Consistent execution of these long-term priorities, combined with our focus on productivity and continuing innovation, have delivered good financial returns for our shareholders.”
Despite the record result, Narev said business conditions had been mixed and he expected the same in the year ahead.
“Our primary areas of economic focus are the level of confidence of Australian business and households, the impact of economic conditions in China on the demand and price for resources, the value of the Australian dollar and the resultant impact on export-sensitive parts of the Australian economy and the stability of funding markets,” he said.
“Indicators relating to all of these factors have been mixed over the past six months, and we expect that to remain the case in the near term.”
Analysts said the bank was always going to deliver quality numbers, with growth only looking like it will get stronger over the coming financial year.
“The question was by how much would it beat consensus figures,” said IG Markets strategist Evan Lucas. “The answer is substantially, for a business that is watched by over 20 broking houses. The numbers make compelling reading.”
Commonwealth’s retail banking division posted profit growth of 13 percent for the financial year, while its business banking arm saw its profit fall two percent.
The bank’s wealth management operations lifted profit nine percent while its institutional banking division saw profit climb 10 percent. AFP
