Loan losses flatten insto banking profits

Commonwealth Bank's institutional banking division produced an uninspiring result over its 2015 year, with cash net profit advancing only one per cent to A$1.3 billion.

There was "strong growth in both institutional lending and asset leasing volumes, and positive sales and trading revenues in markets," the bank said.

But "this was partly offset by lower lending margins, increased operating expenses and a higher loan impairment expense."

The Business and Private Banking division, by contrast, produced a ten per cent lift in cash profit to $1.5 billion, thanks to "above system balance growth in key product lines."

Loan losses also fell in business banking, once more in contrast to institutional where losses rose close to threefold.

A favourable exchange rate explains most of the lift in earnings from the bank's international activities, up 28 per cent to $104 million.

Underlying profit in this business increased more slowly. "Excluding the $50 million provision for impairment of the investment in Vietnam International Bank in the prior year, cash net profit [for international] decreased 21 per cent.

Lending losses offshore, though, more than trebled to $25 million, with most of those losses incurred in Indonesia.