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Profit tumble for Aust. bank CBA
SYDNEY, Australia (CNN) -- Australia's second-largest bank Commonwealth Bank of Australia (CBA) has posted a 24 percent fall in full year net profit to just over A$2 billion ($1.32 billion) on restructuring costs and weak earnings in its wealth management business. But CBA chief executive David Murray said Wednesday the result reflected a strong banking performance in the Australian and New Zealand retail markets. It was slightly ahead of analyst expectations and helped push CBA shares about 0.6 percent higher to A$29.80 in early afternoon trade. Net profit for the year to June 2003 was A$2.012 billion, compared with a record A$2.655 billion a year earlier. At the time, Murray warned of an uncertain outlook for 2002-03 because of volatile global equity markets. CBA said its cash net profit for the year was A$2.579 billion, an increase of 3 percent on the previous year. It said cash earnings were before goodwill amortization of A$322 million and a A$245 million reduction in the appraisal value of its wealth management business. "It was a little bit better than expected, which all came from the bank, although the quality of the earnings wasn't that good," Shawn Burns, portfolio manager at Deutsche Asset Management, told Reuters. Murray said Australia's economy, while reasonably resilient, remains dependent on recovery in the United States. Still, he said the longer-term outlook for the Australian banking, insurance and wealth management sectors was for "continuing growth". CBA, which took a big writedown during the year on its A$9.5 billion venture into funds management, said underlying net profit after tax for its funds management operations fell A$132 million. It said that reflected weakness in investment markets and retail investor preference for defensive cash-based products and property. CBA competes with three other main banks in Australia -- National Australia Bank, Westpac and ANZ, all of which have operations in neighboring New Zealand. CBA said on Tuesday it was not a candidate to bid for New Zealand's biggest bank, National Bank of New Zealand, which UK-based Lloyds TSB hopes to sell for up to $4 billion. Westpac and ANZ have already said they are considering making offers. NAB is regarded as an unlikely candidate for NBNZ, with the only other potential bidders seen to be HSBC, Citigroup, HBOS and Singapore's DBS. CBA will announce details of a major cost review in six weeks, with analysts expecting more staff cuts and one-off charges, Reuters reports. CBA shares are up 10.3 percent so far this year, outperforming a 5.7 percent rise in the benchmark S&P/ASX 200.
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