Commbank delivers despite volatility

Ralph Norris

The Commonwealth Bank has managed to deliver a relatively modest but still healthy 7 per cent increase in net profit after tax of $4,791 million despite what it acknowledged had been a challenging environment.

Significantly, the bank reported that underlying profit after tax for its wealth management business had increased by 38 per cent to $756 million, which included a $1,098 million pre-tax gain from the sale of assets, albeit that second half earnings had been impacted by the deteriorating market conditions.

However, it said that funds under management had increased by 10 per cent to $185 billion, with positive net flows offsetting the falls in the value of Australian and global equity portfolios.

It said that net fund flows for the year of $28.6 billion had been driven by strong flows into the FirstChoice platform, particularly in the first half of the year and solid institutional flows by the CFS Global Asset Management business, with strong international flows and short-term cash mandates from institutional investors.

The bank said that CommInsure’s in-force premiums had increased by 22 per cent on the previous year to $1,250 million, reflecting strong sales volumes and continued progress of the Wealth Management initiative.

Discussing the outlook for the bank, Commonwealth chief executive Ralph Norris said the headwinds experienced in 2008 were expected to dominate the outlook for some time.

“We are cautious going into the new financial year and the group will continue with its conservative stance until signs of improvements in economic conditions are evident,” he said.