Commonwealth Bank makes record $8.68 billion profit

COMMONWEALTH Bank has posted a record $8.68 billion full year cash profit, with gains across each of its core divisions.

Mr Ian Narev, Chief Executive of Commonwealth Bank holds press conference to apologise to customers affected by poor advice given to customers between 2003 and 2012 which caused financial loss and distress. Press confernce held at Colonial Theatre, Commonwealth Bank offices, Sydney.

COMMONWEALTH Bank has posted a record $8.68 billion full year cash profit, with gains across each of its core divisions.

Australia’s largest bank lifted its cash profit 12 per cent for the year to June 30, 2014, from $7.82 billion in 2013.

Cash profit is a measure banks use to reflect underlying performance.

Analysts had expected a cash profit of around $8.7 billion.

Net profit, which includes one-off financial items, was $8.63 billion, up 13 per cent from $7.67 billion in 2013.

The bank lifted its fully-franked final dividend 18 cents to $2.18, taking its full year dividend pay out to $4.01, a 10 per cent increase.

Chief executive Ian Narev said the bank was “cautiously positive” about the outlook for the 2015 financial year as low interest rates help to offset weak consumer confidence and the slide in mining investment.

“While business and consumer confidence levels have remained fragile, the levels of underlying activity confirm the strong foundations of the Australian economy,” he said.

“Lower interest rates have been positive for the housing and construction sectors, where increased activity has gone some way to offset the impacts of the anticipated reduction in investment in the resources sector.”

The Commonwealth lifted its net interest margin, the profit it makes on its loans, by one basis point to 2.14 per cent during the year despite strong competition among the big four banks for loans. Customer deposits were up $34 billion to $439 billion and now represent 64 per cent of the group’s total funding.

Earnings from its retail banking division were up 12 per cent to $3.47 billion, and up four per cent from its business and private banking business to $1.53 billion.

Meanwhile, the bank’s wealth management division lifted earnings 17 per cent to $793 million and its institutional banking and markets division recorded a five per cent increase to $1.26 billion.