Wealth management struggles amid strong Commbank result
The Commonwealth Bank has steamed its way to a 19 per cent increase in net profit after tax - $3.624 billion for the six months to the end of December - with cash net profit up seven per cent to $3.576 billion.
The result saw the directors declare an interim dividend of $1.37 per share, and came despite the big banking group's wealth management divisions continuing to struggle in what were acknowledged to be highly volatile markets.
Commonwealth Bank chief executive Ian Narev used his results presentation to specifically reference "weak growth in markets-based business, with earnings for Wealth Management and Institutional Banking and Markets impacted by volatility in global financial markets".
The results documentation lodged with the Australian Securities Exchange (ASX) today revealed a 24 per cent decline in cash net profit after tax to $272 million compared to the same period in 2010.
It said the result had been impacted by deteriorating global investment markets, which had offset a solid insurance performance due to strong inforce premium growth and stable claims experience.
The announcement said Colonial First State's net profit after tax had decreased by 59 per cent due to softer funds under administration growth due to challenging market conditions, a customer mix shift towards lower-margin products and increased costs of compliance, including the imposition of an Enforceable Undertaking.
However, it said FirstChoice and Custom Solutions had continued to perform well.
Commenting on the result, Narev made clear the banking group had no plans to either send jobs offshore or to embark on major redundancy programs.
Looking over the horizon, the CEO said the outlook for the global economy remained unpredictable, with the group planning to retain its existing conservative business settings.
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