The Commonwealth Bank has reported a solid half-year result with cash net profit after tax up four per cent to $4.804 billion for the six months ended 31 December, 2015.
The Wealth Management division made a positive contribution to the result, with the banking group’s funds management operation benefiting from a lower Australian dollar while both its group and retail insurance operations benefited from pricing adjustments and lower claims experience.
The Board declared an interim dividend of $1.98 per share, unchanged from the 2015 interim dividend.
Commenting on the result, Commonwealth Bank chief executive, Ian Narev expressed satisfaction with the outcome but pointed to economic and market challenges ahead.
“These results show that through the latter part of 2015, the Australian economy continued its steady transition from a resource-dependent economy to a more diversified one,” he said.
“Sound monetary policy and a lower Australian dollar are stimulating construction and starting to benefit export-sensitive industries such as tourism, education and agriculture. As a result the economy overall is starting to generate a broader base of jobs.”
He said the transition was still in its early stages and that there was a need to focus on the long-term.
Where the bank’s Wealth Management division is concerned, the bank’s announcement to the Australian Securities Exchange said cash net profit after tax was up seven per cent to $372 million with the result being driven by from a strong contribution from insurance income and solid growth in funds management income.
In the advice and platform space, it said Funds Under Advice (FUA) margins had declined slightly due to lower platform margins driven by competition and continued run-off in the legacy investment business, partly offset by higher advice revenue.
While there has been some media speculation about the future of the Commonwealth Bank’s insurance business, the ASX announcement pointed to a 20 per cent increase in insurance income to $330 million with life insurance inforce premiums up four per cent.
