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CBA posts $4.8bn profits

CBA posts $4.8bn profits

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Date Published : Wednesday, August 13, 2008

In the middle of the credit crisis Commonwealth Bank of Australia (CBA) has announced statutory post-tax profits of $4.79 billion for the year ended June 30th 2008.

The profits at Australia's biggest bank represent a seven per cent increase over the previous year despite the volatility of the capital markets.

CBA's capital position stayed strong over fiscal 2008 with a tier one ratio of 8.17 per cent indicating its financial strength and ability to absorb any loan losses it may make from delinquent mortgages or credit cards.

The bank's chief executive officer Ralph Norris described the company's financial performance as "solid" despite the "challenging year for the global banking industry".

Speaking to Reuters, Mark Nathan, a fund manager with Fortis Investment Partners, claimed that CBA's results are "encouraging" and that Australia is likely to emerge from the credit crisis without any "material long-term impact".

"There's no risk of Australian banks going under," he added.

Despite the encouraging financials CBA's share price slipped one per cent to $44.05 on August 13th after the lender also announced that it was pulling out of talks with Royal Bank of Scotland (RBS) to buy the Australian operations of ABN AMRO.

The Dutch bank was acquired by a consortium comprising Fortis, RBS and Banco Santander last year and the Australian operations have been estimated to be worth around $800 million.

CBA claims that it ended the discussions after assessing the current economical climate along with the uncertainty in the world financial markets and the risks involved in such a transaction.

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