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Commonwealth Bank has reported a $2.65 billion first-quarter profit.

Commonwealth Bank has announced a $2.65 billion first-quarter profit. Picture: Hollie Adams/The AustralianSource:News Corp Australia Commonwealth Bank has announced a $2.65 billion first-quarter profit. Picture: Hollie Adams/The AustralianSource:News Corp Australia

COMMONWEALTH Bank has joined the other major lenders in announcing an eye-watering profit, for their first quarter.

COMMONWEALTH Bank has reported a $2.65 billion first-quarter profit, helped by increased home lending and household deposits.

Australia’s biggest bank said today its unaudited cash profit for the three months to September 30 was six per cent higher than the average of each of the previous two quarters.

Home lending rose at an annualised 2.7 per cent compared to the previous three months, although CBA said growth was managed within Australian Prudential Regulation Authority limits on investor and interest-only mortgages.

Rate hikes for those mortgages helped net interest margin improve on the 2.11 per cent reported for the second half of the 2016/17 financial year, although CBA’s trading update did not say by how much.

The lender will give further details when it releases its first-half earnings report on February 7.

The announcement comes a week after NAB reported a full-year profit of $6.6 billion and that it would shed 6,000 jobs by 2020.

Home lending and household deposits has helped the Commonwealth Bank deliver a $2.65 billion first-quarter profit. Hollie Adams/The AustralianSource:News Corp Australia

And Westpac announced its had lifted its full-year profit three per cent to $8 billion.

Commonwealth Bank first-quarter statutory profit, which includes one-off costs, was $2.80 billion on an unaudited basis.

CBA, which reported a record $9.9 billion full-year cash profit in 2016/17, said operating income grew four per cent against the average of the previous two quarters.

Operating expenses also rose four per cent as CBA made provision for the estimated cost of regulatory actions and compliance programs, including those related to AUSTRAC’s allegations of anti money laundering and counter terrorism law breaches.

But the bank said it was impossible to give an estimate for the cost of potential penalties that might result from the Federal Court proceedings brought against it by the regulator.

Commonwealth Bank did not update investors on any progress in finding a replacement for chief executive Ian Narev, who is due to retire in the current financial year due to the fallout of the AUSTRAC allegations.

Outgoing CBA CEO Ian Narev. Picture: Kym SmithSource:News Corp Australia

FIGHT AGAINST BANK LEVY

The news comes as Westpac says it will keep fighting to remove the federal government bank levy.

Chairman Lindsay Maxsted says the introduction of the bank levy in July this year had already impacted both the value and the returns from shareholder investment in the bank.

He described the levy as a “highly inefficient and distortive tax” that places an impost on a small number of Australia’s largest taxpayers, adding that Westpac and its shareholders must “continue to agitate for its removal”.

“It discriminates against Australian banks relative to global peers and it has impacted the value of your investment and the investments of millions of superannuation holders across Australia,” Mr Maxsted said in Westpac’s annual report.

Westpac chairman, Lindsay Maxsted is concerned about the impact of the bank levy. Picture: Hollie Adams/The AustralianSource: News Corp Australia

Further tightening of credit standards and regulatory limits on elements of mortgage growth, plus a slowdown in Australia’s economic growth, will likely lead to slower growth in lending and deposits in the 2018 financial year, he added.

The levy, which was announced in the 2017 federal budget, applies to the four major banks as well as Macquarie Bank.

Westpac said the tax cost the lender $95 million in the 2017 financial year, and is estimated to cost about $405 million in the 2018 full-year.

Westpac chief executive Brian Hartzer has enjoyed a boost in his annual pay. Picture: AFPSource:AFP

“Our financial settings are in good shape but we will be subject to the full period impact of the bank levy in 2018,” Mr Maxsted said.

The annual report released on Wednesday also revealed Westpac boss Brian Hartzer received a boost in his annual pay to $5.5 million.

Mr Hartzer took home $4.2 million in salary and cash bonuses in the year to September 30, plus another $1.3 in cash bonuses deferred from previous years.

The chief executive’s $5.5 million pay packet is higher than the $4.9 million he took home a year ago, due to a lift in both his awarded and deferred short-term incentives.

This article was firs published by http://www.news.com.au
Author: AAP, Staff writers
Last modified onWednesday, 15 November 2017 01:21

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