Aust. bank profit takes a tumble
By Geoff Hiscock
CNN Asia Business Editor
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CEO David Murray sees modest growth ahead
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SYDNEY, Australia (CNN) -- Volatility in world stock markets has cut into the first-half result for Australia's second-largest bank, Commonwealth Bank of Australia (CBA).
The bank on Wednesday reported a 48 percent fall in interim net profit to A$622 million ($367 million), after taking a A$426 million writedown on the value of its Colonial First State fund-management and life-insurance businesses.
Also impacting the result was A$160 million of goodwill amortization. Net profit on a cash basis was A$1.21 billion, up 1 percent over the same period in 2001.
Shares in CBA are 0.35 percent lower at A$25.80 at midday. The broader market, measured by the S&P/ASX200, is unchanged at 2,879.0.
CBA said the disappointing result for the fund-management business was expected, because of poor investment markets.
'Modest growth' ahead
It said total funds under management fell by A$11 billion to A$95 billion over the half year to December 31, 2002. That reflects a net A$3 billion outflow in relation to the acquisition and disposal of businesses.
CEO David Murray said the result was consistent with the outlook given at the bank's annual general meeting in November. He said the bank expected to achieve "modest growth" in cash earnings over the second half to June 2003.
Murray said CBA's core banking business had seen strong growth, but the performance of the fund-management and life-insurance businesses reflected "poor investment returns and further declines in equity markets globally."
CBA paid about A$10 billion when it bought the Colonial First State business in June 2000.
Shares in CBA's bigger rival, National Australia Bank, are off 0.6 percent at A$30.14.
Last August, the NAB said it would cut more than 2,000 jobs over the ensuing 18 months in a move to lift earnings per share by 12 percent in the 2003-04 business year.
