20110811_cba_profit_tab
Commonwealth Bank reported net profit of $6.39 billion for the year to June. This was up 13 per cent on the previous corresponding period.
On a cash basis, after adjusting for hedging volatility and Bankwest merger expenses, the bank's earnings, of $6.8 billion, were up 12 per cent.
Earnings per share rose 12 per cent (11 per cent on a cash basis). Return on equity rose to 18.4 per cent for the full year (or 19.5 per cent on a cash basis).
The net interest margin for the group rose from an average of 2.13 per cent in 2009/10 to 2.19 per cent in the year to June. The margin rose to an average of 2.25 per cent in the June half.
Six basis points of the margin increase were due to home loan repricing and one basis point was the result of personal loan repricing. This was partly offset by a reduction in the business lending margin, which had a one basis point impact on the margin.
CBA's result was helped by a 38 per cent drop in its loan impairment expenses, which fell from $2.1 billion in 2009/10 to $1.3 billion in the year to June.
The loan impairment expense represented 22 basis points of average gross loans and acceptances in the June half. Back in June 2009 the ratio was 61 basis points.
There were increases in impaired assets and arrears in the June half. New impaired assets fell from 45 basis points of gross loans and acceptances in the June half last year to 40 basis points in the December half but were back up to 45 basis points in the latest half.
Loans 90 days past due increased from 65 to 73 basis points of gross loans and expenses over the past year.
The bank's chief financial officer, David Craig, said: "The arrears are down in the last couple of months and, I'm pleased to say, that for the month of July we are down a little bit further."
Another contributor to the result was tight control of expenses. Operating expenses rose only three per cent. The ratio of operating expenses to total operating income fell from 45.7 to 45.5 basis points. A long term aspiration remains to reduce this ratio to 35 per cent.
Among the divisions, the big movers were retail banking services, whose earnings rose 16 per cent; business and private banking, also up 16 per cent, and the New Zealand operation, which was up 27 per cent.
Retail banking services were by far the biggest contributor to overall earnings, reporting a profit of $2.8 billion.
Bankwest had a big turnaround from a loss of $45 million in 2009/10 to report a profit of $463 million for the year to June.
Wealth management profit fell 11 per cent, and institutional banking and markets was down 14 per cent.
Conditions slowed appreciably in the second half of the year. Half-on-half growth in retail banking services was four per cent, and in business and private banking it was five per cent. Wealth management's decline accelerated - down 21 per cent half-on-half.