CBA flags concerns despite $9.4bn profit

Commonwealth Bank has reported a three per cent lift in full-year cash profit to $9.45 billion.

The result was close to the expectations of analysts, many of whom expected $9.5 billion.

But the flat payout does indicate a lack of solid confidence about the outlook for the economy and for banking over the next year.

“Continuing demand for Australian resources, a vibrant construction sector in NSW and Victoria, and employment growth in key services sectors have underpinned real GDP growth and employment stability”.

Australia’s banks are preparing for slowing growth after years of record profits as a mining downturn leads to higher corporate bad debts and tougher capital requirements force up costs. CBA said the result was driven by growth in funds management income and lower operating expenses, offset by lower investment experience. “When combined with ongoing global economic and political uncertainty this makes households and businesses cautious, and hesitant to respond to monetary stimulus”.

The Labor party, which is pushing for a bank royal commission, is reportedly expected to focus on the Commonwealth Bank’s failure to ease credit card rates despite bumper profits.

CEO Ian Narev: “We will continue to manage for the long term, putting customers first and investing for the future”.

Customer deposits made up 66 percent of total funding from 64 percent six months earlier, and the net stable funding ratio exceeded 100 percent.

“Customer satisfaction is the key metric we use to benchmark execution of group strategy, because satisfied customers look to us to meet more of their needs”, he explained in a statement. Net interest income, the difference between interest earned and paid out, was up 7 percent at A$16.9 billion.

The drop in marketing comes as advertising spend for its New Zealand-based company, ASB Bank, increased year on year.

“Our capacity to support our customers is directly related to the strength of our balance sheet”. It raised A$5.1 billion previous year by selling new shares to meet new regulatory requirements.

He said that would ensure the banks were regularly accountable to elected members in the same way as the RBA or the Australian Prudential Regulatory Authority.