Controversies over bank profits are never far away in Australia, and the latest profit reported by Commonwealth Bank might be one capable of reviving this debate.For all the talk of the "challenging" conditions CBA reported a return on equity on a cash basis in the second half of 20 per cent, a level that's on the high side of ROEs for major banks in Australia if the statistical history published by APRA is any guide.CBA's return on assets is also now back at 1.0 per cent, and almost back to the boom-time peak of an ROA of 1.1 per cent of slightly better.Banks have a pressing need to generate capital via profits in order to prepare for the harsher, though still not fully defined, regulatory capital regime that APRA will impose and consistent with the Basel III standards being worked out in international regulatory forums.CBA, however, have not considered it necessary to hold back even a sliver of this improved profit for its own reserves. The dividend payout ratio, at 73.2 per cent of profits (on a cash basis) is down by a faction of a percentage point from the year before.The bank may consider that's its capital base is already adequate. It puts its core tier one ratio at June 2011 at 7.7 per cent which is a bit better than for other Australian banks but also potentially below the ratio the bank needs to achieve to meet the tougher standard. (On the other hand APRA is yet to finalise that standard and CBA considers it has a capital buffer already in line with Basel III standards if APRA's rules "fully align" with those proposed by the Basel committee).To put the CBA 2011 return on equity in context APRA data shows that ROE's for major banks in Australia peaked at a shade over 20 per cent in late 2007 and early 2008, and were more typically in a range from 16 per cent to 19 per cent in the years of the late boom. Note that APRA uses statutory profit in its calculation and will be slightly lower than those cited by banks themselves.Ken Henry, the former secretary of the Treasury, in a speech in December last year asked "Is a 15 per cent post-tax rate of return on equity too high or too low?" and went to answer that 15 per cent might be about right, but only so long as the industry was competitive and contestable.The Reserve Bank of New Zealand is also taking an interest in the topic, writing in June that  "the return on equity in the New Zealand banking system appears to have been very high by OECD standards".