A scrappy profit from CBA 14 February 2008 5:56PM Ian Rogers Management practices, pricing decisions and, to an extent, worsening credit quality wear most of the blame for a somewhat crummy profit from Commonwealth Bank for the half year to December 2007. Elevated funding costs and thus reduced margins as a result of the credit crunch appear to be the least significant factor in a profit that disappointed investors yesterday, and dragged the bank's share price down by 6.5 per cent.The headline result for Commonwealth Bank is a rise of four per cent in the cash profit for the half year to December 2007 to $2.39 billion. The bank's return on equity eased in the December 2007 half year to 20.8 per cent from 22.6 per cent in the December 2006 half year. Commonwealth Bank's wealth management businesses, Colonial First State, CFS Global Asset Management and CommInsure, produced an aggregate 27 per cent increase in cash earnings for the six months to December.Wealth management and international financial services were the bank's standout divisions, both increasing earnings by 27 per cent. Wealth management's $380 million of cash earnings made up 15.9 per cent of group earnings. A year ago wealth management contributed 13 per cent of group earnings.This strong performance was built on an 18 per cent increase in net funds inflow. The group has $199 billion of funds under administration. Retail banking services made the biggest contribution to group earnings. Its $949 million cash profit was eight per cent higher than the previous corresponding period. Premium business services, which includes institutional banking, corporate and business banking, agribusiness and private client services (including CommSec) was flat. Its $724 million of cash earnings was unchanged from the previous corresponding period. Revenue for the group was up 12 per cent but expenses rose nine per cent and there was a very big increase in loan impairment expenses, which rose from $20 million in December 2006 to $175 million a year later.International Financial Services includes New Zealand's ASB Bank and Sovereign Bank, and Indonesian, Chinese, Vietnamese and Fijian businesses. ASB Bank, which dominates the group, increased its cash earnings by 20 per cent in Australian dollar terms and by 12 per cent in New Zealand dollar terms.