CBA Unaudited Profits Jump 44 Per Cent

Post by Sharat on January 18, 2010 · Under Australian Economy, Business News, Company News, banking · Comment

Australian banking major, Commonwealth Bank of Australia re-emphasised just how unscathed the nation’s largest lenders have emerged from the global financial crisis, and on Friday reported a 44 per cent jump in first half profit to $2.9 billion.

The half year result ending December 31st 2009 is expected to come in about $200 million above analyst expectations and will most likely trigger a re-rating of the entire banking sector.

On Friday CBA issued a release to the Australian Securities Exchange which said the nation’s largest mortgage lender was expecting to post an unaudited rise in net profit from $2.01 billion to $2.9 billion, after experiencing robust growth across all key business areas.

CBA’s net profit was more than 7 per cent above consensus analyst expectations, which had estimated its net profit to be approximately $2.7 billion.

CBA’s announcement highlights the relative strength of the Australian banking sector, at a time when rivals have been nationalized in other countries and many major lenders still require a long road to recovery.

The recovery in equity markets was the main reason behind CBA’s improved performance; the lender reaped a $240 million after tax windfall. During the last six months of 2009 the Australian equity market has rallied some 24 per cent.

The Melbourne based lender said there were also other factors that contributed to its strong performance, including a disciplined approach to cost control, a reduction in credit impairment charges, and strong income and volume growth across all its banking businesses.

Last year CBA saw its provision for bad and doubtful debt rise fivefold to $1.6 billion, after making loans to failed companies including ABC Learning.

CBA is scheduled to release its full results for the first half of the financial year on February 10.

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