CBA sings wealth management praises
The Commonwealth Bank is anticipating the growth in its wealth management division to exceed that within its traditional banking divisions going forward, providing justification for its move into the arena through the acquisition ofColonial.
At the group’s annual general meeting today, chairman John Ralph said the value of its wealth management businesses has increased by $1.81 billion since the group’s merger with Colonial.
Ralph says this will continue due to demographic factors and the greater reliance of the community on superannuation and retirement savings.
“The board thinks the bank has adopted the right strategy in trebling its involvement in the wealth management businesses by acquiring Colonial,” Ralph says.
Ralph says this value increase comes despite a writedown in the assessed value in the first half of the last financial year, which is to be expected given wealth management’s position within the market cycle.
Commonwealth chief executive David Murray says that the group’s funds under management of $94 billion was a fall of 8 per cent in the 2002/03 financial year due to adverse market conditions.
Ralph says participation in the wealth management sector naturally brings with it greater volatility associated with the volatility of the securities markets in which clients’ funds are invested.
“In a period in which a market correction occurs, as has occurred in recent times, it is not totally surprising that returns from this business will reflect what superannuation members and other investors have experienced in such market conditions,” he says.
Murray says that despite the fall in the last financial year, the group’s FirstChoice master trust is going well, having surpassed over $4 billion in funds under management.
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