Final Results Media Release
14 Août 2009 - 8:26AM
UK Regulatory
TIDMBN74
RNS Number : 4450X
Commonwealth Bank of Australia
14 August 2009
COMMONWEALTH BANK OF AUSTRALIA DELIVERS SOLID RESULT
Result underpinned by strong banking performance
Highlights of 2009 Result
* Cash NPAT of $4,415 million declined 7 percent - due to increases in impairment
expenses;
* Delivered cash Return on Equity of 15.8 percent;
* Banking businesses underlying performance remained strong;
* Sound cost disciplines drove increased business efficiencies;
* Continued good progress on key strategic priorities;
* Bankwest and St Andrew's acquired at attractive price - integration proceeding
smoothly;
* Final fully franked dividend of $1.15 declared; and
* Strong capital, liquidity, and funding and conservative provisioning.
+-----------------------------+-------------------------------------------------------+--------------------------------------------------------+
| | 2009 | 2009 |
| | | v |
| | | 2008 |
+-----------------------------+-------------------------------------------------------+--------------------------------------------------------+
| Statutory | 4,723 | (1%) |
| NPAT ($m) | | |
+-----------------------------+-------------------------------------------------------+--------------------------------------------------------+
| Cash | 4,415* | (7%) |
| NPAT | | |
| ($m) | | |
+-----------------------------+-------------------------------------------------------+--------------------------------------------------------+
| Cash | 305.6 | (14%) |
| EPS | | |
| (cents) | | |
+-----------------------------+-------------------------------------------------------+--------------------------------------------------------+
| Final | 1.15 | (25%) |
| Dividend | | |
| ($ per | | |
| share) | | |
+-----------------------------+-------------------------------------------------------+--------------------------------------------------------+
| Return | 15.8% | (460)bpts |
| on | | |
| Equity | | |
| - Cash | | |
+-----------------------------+-------------------------------------------------------+--------------------------------------------------------+
* Includes operating results of Bankwest and St Andrew's for the six months
to 30 June 2009.
Sydney, 12 August 2009. The Commonwealth Bank of Australia's (the Group's) net
profit after tax ("statutory basis") for the full year ended 30 June 2009 was
$4,723 million, which represents a decrease of 1 percent on the prior year.
Included in this result is the gain recognised on acquisition of Bankwest of
$612 million after tax.
Net profit after tax ("cash basis") for the full year was $4,415 million, which
represents a decrease of 7 percent on the prior year. This result was impacted
by a significant increase in impairment expense during the year.
Having maintained the interim dividend at the same level as the prior year
($1.13 per share), the Board took the view that in the current uncertain
environment it would be prudent to reduce the final dividend to $1.15 per share
- down 25 percent on last year's final dividend. Total dividend paid for the
year was $2.28 per share - down 14 percent on the prior year.
The acquisition of Bankwest and St. Andrew's at a substantial discount to book
(0.7 times) value created a one-off gain of $612 million after tax. For ease of
comparison the results of Bankwest, which was only owned for six months and
contributed $113 million to cash profit after tax, have been excluded from the
following commentary.
Key financial performance highlights for the year included:
* Strong operating performance with operating income up 14 percent and cost growth
contained to 4 percent;
* Net interest income growth of 21 percent on the prior year, reflecting solid
lending and deposit growth;
* Underlying Net Interest Margin increased by eight basis points for the year;
* Other banking income growth of 21 percent on the prior year, as a result of
strong trading income and higher commissions and lending fees;
* Funds management income decline of 21 percent on the prior year, due to the
adverse impact of the investment market downturn on Funds under Administration
and timing of asset sales;
* Insurance income growth of 9 percent on the prior year, following a 19 percent
increase in average inforce premiums;
* Operating expense growth of 4 percent on the prior year, reflected the Group's
continued disciplined approach to expense management;
* Continued improvements in productivity with Group operating expense to operating
income ratio improving 430 basis points to 44.6 percent; and
* Higher loan provisioning levels, reflecting a cyclical deterioration in
portfolio quality and the Group's prudent and conservative approach to
provisioning.
The Group's long term credit ratings with Standard and Poor's and Moody's
Investor Services has been reconfirmed at AA and Aa1 respectively. Capital
remained strong, with Tier 1 at 8.07 percent (UK FSA equivalent of 11 percent).
In recognition of the continued uncertainty in the outlook for global financial
markets, the Group has elected to retain high levels of liquidity - $80 billion
as at 30 June 2009. While funding remains expensive, the Group is well advanced
with its 2010 financial year funding programme having already raised $10.5
billion in long term wholesale funding since 1 July 2009. The Group has retained
its conservative approach to provisioning with total provisioning of $4,954
million as at 30 June 2009. The Group's ratio of Total provisions to Credit Risk
Weighted Assets rose to 1.92 percent.
The Group's strong financial position and clear strategic focus enabled it to
grow both organically and by acquisition. Acquiring Bankwest at an attractive
price has provided a unique opportunity to expand in Western Australia. The
Group also secured a strategic stake in Australia's leading home loan mortgage
broker - Aussie Home Loans and $2.25 billion of Wizard originated home loans
following Aussie's purchase of the Wizard brand and distribution network.
Focus on customer service helped generate a strong performance from its banking
business. The Group continued to look to the future having invested over $1
billion in a range of productivity, compliance and growth projects including
Core Banking Modernisation, which made good progress during the year.
Commenting on the result, Group Chief Executive Officer, Ralph Norris said: "The
Group has performed well in what has clearly been a demanding year for the
global banking industry. A number of factors contributed to this good result
including the strength of our banking franchise, our emphasis on maintaining
high credit standards and our determination not to compromise our AA credit
rating. As a result the Group is emerging from the global financial crisis in a
very strong position. We are one of only a handful of banks globally which has
retained its AA rating and we were recently ranked by Global Finance Magazine as
one of the top fifteen safest banks in the world. This strength has enabled the
Group to continue to support its customers at a time when many need our help."
Business Performance
Retail Banking Services performed strongly over the year with cash net profit
after tax of $2,107 million, increasing 10 percent on the prior year. The result
was underpinned by strong sales and volume growth in key product lines, and
disciplined cost management. However, higher impairment expenses and funding
costs and intense competition for retail deposits had an adverse impact on
margins and profitability.
Business and Private Banking achieved cash net profit after tax of $736 million,
which represents a 2 percent increase on the prior year. This result was
impacted by a significant increase in impairment expense during the year. The
operating performance of the business was strong with total banking income
increasing 9 percent, driven by strong business lending and deposit volumes and
effective margin management.
Institutional Banking and Market's underlying performance remains strong with
operating performance (pre provisions) up 49 percent to $1,723 million. However,
cash net profit after tax of $166 million for the year, represented a decrease
of 78 percent on the prior year as a result of a significant increase in
impairment expense.
Wealth Management's underlying profit after tax fell 35 percent on the prior
year to $514 million. The Insurance business achieved strong volume growth over
the year with total inforce premiums up 25 percent to $1.6 billion at 30 June
2009. The Funds Management businesses were impacted by sustained pressure on
investment markets and while down on the prior year, market conditions showed
improvements in the last quarter. Funds under Administration as at 30 June 2009
decreased 9 percent to $169 billion.
Cash net profit after tax for the Wealth Management business was down 61 percent
to $286 million, primarily due to unrealised mark to market losses from widening
credit spreads on the valuation of assets backing the Guaranteed Annuities
portfolio, and the impairment of listed and unlisted investments.
International Financial Services cash net profit after tax for the year was $470
million, a decrease of 19 percent on the prior year. After removing the impact
of currency fluctuations, the decrease was 13 percent. The lower result was due
predominantly to increased impairment expense in ASB Bank which increased by
$159 million to $193 million.
ASB Bank cash net profit after tax for the year was $332 million. Excluding the
impact of realised gains on the hedge of New Zealand operations and currency
fluctuations, profit reduced by 9 percent on the prior year. The result reflects
the impacts of the downturn in the New Zealand economy which entered recession
in early 2008. Balance sheet growth slowed, margins contracted due to higher
funding costs and impairment expense increased sharply. Despite these
challenging conditions, ASB Bank was able to grow revenue, mainly through a
strong trading result.
Outlook
Commenting on the outlook for the 2010 financial year Ralph Norris said: "The
2009 financial year has been a challenging one and the outlook remains
uncertain. However, the Australian economy has been more resilient than many had
predicted a year ago and it is pleasing to see that there is some evidence of
the beginnings of an economic recovery and improvements in business and consumer
confidence but there are still significant risks on the downside."
"Despite these positive signs, overall credit growth in Australia is expected to
slow through 2010 and economic conditions are likely to remain challenging for
the Group and many of its customers in the coming year. Accordingly the Group
will retain its conservative business settings maintaining appropriate levels of
capital, liquidity and provisioning. The Group will also continue with its
cautious approach to the management of credit and market risk."
Ends
Media contact:
Bryan Fitzgerald
Head of Communications
Ph: (02) 9378 2663
Mobile: 0414 789 649
+------------------------------------+---------+---------+-----------+---------+---------+---------+
| Highlights | Full | Full | Jun 09 | Half | Half | Jun 09 |
| | Year | Year | vs | Year | Year | vs |
| | ended | ended | Jun 08 | ended | ended | Dec 08 |
| | Jun 09 | Jun 08 | % | Jun 08 | Dec 08 | % |
| | $M | $M | | $M | $M | |
+------------------------------------+---------+---------+-----------+---------+---------+---------+
| Retail Banking Services | 2,107 | 1,911 | 10 | 988 | 1,119 | (12) |
+------------------------------------+---------+---------+-----------+---------+---------+---------+
| Business and Private Banking | 736 | 721 | 2 | 363 | 373 | (3) |
+------------------------------------+---------+---------+-----------+---------+---------+---------+
| Institutional Banking and Markets | 166 | 771 | (78) | 334 | (168) | large |
+------------------------------------+---------+---------+-----------+---------+---------+---------+
| Wealth Management | 286 | 737 | (61) | 111 | 175 | (37) |
+------------------------------------+---------+---------+-----------+---------+---------+---------+
| International Financial Services | 470 | 581 | (19) | 192 | 278 | (31) |
+------------------------------------+---------+---------+-----------+---------+---------+---------+
| Other | 537 | 12 | large | 301 | 236 | 28 |
+------------------------------------+---------+---------+-----------+---------+---------+---------+
| Net profit after tax excl. | 4,302 | 4,733 | (9) | 2,289 | 2,013 | 14 |
| Bankwest (cash basis) | | | | | | |
+------------------------------------+---------+---------+-----------+---------+---------+---------+
| Bankwest net profit after tax | 113 | - | large | 113 | - | large |
+------------------------------------+---------+---------+-----------+---------+---------+---------+
| Net profit after tax (cash basis) | 4,415 | 4,733 | (7) | 2,402 | 2,013 | 19 |
+------------------------------------+---------+---------+-----------+---------+---------+---------+
| Net profit after tax (statutory | 4,723 | 4,791 | (1) | 2,150 | 2,573 | (16) |
| basis) | | | | | | |
+------------------------------------+---------+---------+-----------+---------+---------+---------+
| Key Shareholder Ratios | | | | | | |
+------------------------------------+---------+---------+-----------+---------+---------+---------+
| Earnings per share (cents) (cash | 305.6 | 356.9 | (14) | 158.5 | 146.3 | 8 |
| basis - basic) | | | | | | |
+------------------------------------+---------+---------+-----------+---------+---------+---------+
| Return on equity (%) (cash basis) | 15.8 | 20.4 | (460)bpts | 16.3 | 15.0 | 130bpts |
+------------------------------------+---------+---------+-----------+---------+---------+---------+
| Dividend per share (cents) (fully | 228 | 266 | (14) | 115 | 113 | 2 |
| franked) | | | | | | |
+------------------------------------+---------+---------+-----------+---------+---------+---------+
| Dividend payout ratio (%) (cash | 78.2 | 75.0 | 320bpts | 73.7 | 83.6 | large |
| basis) | | | | | | |
+------------------------------------+---------+---------+-----------+---------+---------+---------+
| Other Performance Indicators | | | | | | |
+------------------------------------+---------+---------+-----------+---------+---------+---------+
| Total lending assets (net of | 473,715 | 369,597 | 28 | 473,715 | 449,861 | 5 |
| securitisation) ($M) | | | | | | |
+------------------------------------+---------+---------+-----------+---------+---------+---------+
| Funds under administration - spot | 175,334 | 191,305 | (8) | 175,334 | 164,271 | 7 |
| ($M) | | | | | | |
+------------------------------------+---------+---------+-----------+---------+---------+---------+
| Net interest margin (excluding | 2.11 | 2.02 | 9bpts | 2.18 | 2.04 | 14bpts |
| Bankwest) (%) | | | | | | |
+------------------------------------+---------+---------+-----------+---------+---------+---------+
| Operating expense to total | 44.6 | 48.9 | (430)bpts | 44.9 | 44.3 | 60bpts |
| operating income (excl Bankwest) | | | | | | |
| (%) | | | | | | |
+------------------------------------+---------+---------+-----------+---------+---------+---------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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