Commonwealth Bank has declared a $7.09 billion stator profit after tax (NPAT), recording an 11 per cent increase from last year.


The company’s cash NPAT also recorded a health growth, finishing at $7.11 billion, an increase of four per cent over last year.


Despite the company’s profit growth,  it recorded a one per cent contraction in operational revenue over the half year to June when compared with the previous six months.


Commonwealth Bank’s CEO, Ian Narev, defended the results, saying that the bank is continuing to post health results compared to its competitors.


“This is a good result given the uncertain environment in which we are operating.  As expected, revenue growth was subdued reflecting ongoing caution from both our retail and corporate customers.


Key components of the result include:

  • Continued focus on delivering better services for customers with significant progress towards attaining the Group’s goal of being number one in customer satisfaction;
  • Continued growth in the Australian banking businesses, despite modest system credit growth, with average interest earning assets up $32 billion to $630 billion;
  • Strong growth in retail and business average interest bearing deposits1 up $30 billion to $355 billion, resulting in customer deposits as a proportion of total Group funding improving to 62 per cent;
  • Earnings in markets based businesses of Wealth Management and Institutional Banking and Markets being impacted by uncertainty in global financial markets;
  • Continued margin pressure, particularly from higher retail deposit costs, with Group net interest margin (NIM) down 3 basis points on the prior year, and down 6 basis points on the prior half;
  • Prudent management of operating expenses, with modest cost growth of 3 per cent year on year and costs down marginally half on prior half;
  • A 15 per cent decline in loan impairment expense, with conservative provisioning levels retained.  Total provisioning, at 30 June 2012, was $4.85 billion with the economic overlay unchanged from the prior year.  Credit quality continued to improve with Troublesome and Impaired Assets down by 15 per cent;
  • The maintenance of the Group’s strong capital base with a Basel II Tier One ratio and Common Equity Tier One (CET1) ratio of 10.0 per cent and 7.8 per cent respectively.  The Basel III Internationally Harmonised CET1 ratio was 9.8 per cent;
  • Substantial on-going investment in long term growth.  The Group invested almost $1.3 billion over the period on a tightly managed set of growth initiatives focusing on technology, productivity, organic retail banking growth in Indonesia, China and Vietnam and Wealth Management domestic and global distribution.