Asian investments produce low returns for CBA
Commonwealth Bank disclosed the aggregate earnings of its banking and insurance businesses in Asia for the first time yesterday. In all, this assembly of businesses, acquired on and off over 15 years, produced a cash net profit of $11 million in the December 2008 half year and a profit of $19 million in the June 2009 half year.The pre-tax profit from CBA's Asian business was $8 million in the December 2008 half year and $29 million in the June 2009 half year.Banking income picked up over the two halves, from $66 million to $95 million. Insurance income was largely static at around $18 million. The bank earns no fund management income in Asia.CBA published the profit for its Asian businesses, and a few other crumbs, in a reporting template for the bank's upcoming half-year profit. CBA will publish its interim profit on Wednesday next week.The bank makes much less noise about its Asian operations, though sometimes notes that it has more branches in Asia than ANZ.Most of CBA's Asian earnings arise from its longstanding investment in Indonesia, as well as its more recent, minority investments in China (where it holds stakes in Qilu Bank and Hangzhou City Commercial Bank). Profits from Asia represent less than one per cent of earnings of Commonwealth Bank. Banking income from the region represented 1.2 per cent of all banking income, so on that basis, and using only a short period of data, CBA's Asian investments look disappointing.