CBA bedding down BankWest

Commonwealth Bank reported some anomalous results yesterday in its March 2009 quarterly trading update, which it put down to the impact of including Bank of Western Australia's results following the completion of the acquisition in December.

Commonwealth chief executive Ralph Norris said some of the unexpected outcomes reflected the different business models of the two institutions while others reflected the alignment of BankWest's policies with CBA's in areas such as provisioning.

The bank reported unaudited cash earnings of $1.15 billion for the quarter, in line with March 2008 quarter results.

The bank put itself at the head of the big four in terms of return to shareholders, with a return on equity of 15 per cent.

Impairment expense for the quarter was $630 million. The bank said there was increasing stress in the SME market, especially among companies in export industries, media, luxury goods' suppliers, mining services companies and inbound tourism businesses.

The bank completed its 2009 funding program in March. The funding program included four non-guaranteed raisings totalling $2.6 billion. The tier 1 Capital ratio was 8.3 per cent at the end of March.

Norris said a highlight for the period was strong growth in home lending. For the 12 months to March, CBA's home lending balance increased 18.3 per cent, compared to system growth of 7.5 per cent.

Market share in home loans rose 2.15 percentage points to 24.3 per cent. In the March quarter home loan volume increased by an annualised 22.1 per cent against system of 5.9 per cent.

Twenty-five per cent of new business came from first-home buyers, despite tighter criteria such as a requirement for genuine savings of five per cent, a maximum LVR of 90 per cent and a serviceability rate of 7.24 per cent.