CBA Announces $2 Billion Profit

Commonwealth Bank of Australia (CBA) has announced that it will earn $2 billion profit in the first half of 2009. The company said that it would outperform market expectations by as much as 20 per cent with interim cash profit as large as $2 billion. The ASX requires listed companies to make public any information which substantially differs from consensus earnings estimates. CBA's announcement comes ahead of its interim results which are scheduled for February 11th.

Commonwealth Bank will take a bad debt charge of about $1.6 billion, in line with market estimates, it said. Banking income is expected to increase 20 percent on a year earlier while operating costs decline 2 percent from the previous six months, the statement said. Late last year, in a controversial, $2 billion capital raising, which CBA was reprimanded for failing to act properly in terms of disclosure obligations, the bank said that 2009 provisions would come in at 0.6 per cent of gross loans, or $2.5 billion. Most of that figure, including a $365 million write-off for ABC Learning hybrid notes, would occur in the December half.

According to Commonwealth chief executive officer Ralph Norris, the key components of the result were a 15 per cent increase in total operating income to around $8 billion, driven by the strong performance of the group’s banking business. However, he said this would be partially offset by a decline in funds management income, which was likely to be down around 12 per cent on the prior comparative period. “Underlying operating performance has been robust given the current trading conditions,” Norris said. “As customers look for stable financial institutions in these uncertain times, growth in deposit and credit demand has been strong.”