Australia's Commonwealth Bank annual net profit up 5%

GMT 01:02 2015 Wednesday ,12 August

Arab Today, arab today Australia's Commonwealth Bank annual net profit up 5%

Australia's Commonwealth
Sydney - AFP

Australia's biggest bank, the Commonwealth, on Wednesday reported a five percent rise in full-year net profit to a record Aus$9.063 billion (US$6.62 billion), although results slowed in the second-half.

The nation's largest company by market capitalisation said net profit for the year to June 30 rose from Aus$8.63 billion the previous year, broadly matching expectations.

Cash profit, the bank's preferred measure of earnings that strips out one-off costs, increased by five percent to Aus$9.137 billion.

Shares in the financial institution went into a trading halt as it announced a Aus$5 billion capital-raising to meet tougher regulatory requirements, which follows similar moves by the National Australia Bank and ANZ.

"Maintaining a flexible and strong balance sheet, including a strong capital position, continues to be a strategic focus for the group," chief executive Ian Narev said in a statement.

"We now have greater certainty regarding the key requirements of global relativity and mortgage risk weights.

"Our announcement today strengthens our position in response to those requirements," Narev added about the capital raising.

Commonwealth Bank's capital-raising is the second-largest in Australia's history after NAB's Aus$5.5 billion announcement in May. ANZ announced a Aus$3 billion rights issue last week.

The moves followed new rules released by financial regulator, the Australian Prudential Regulation Authority, for the biggest banks to hold more reserves as a buffer against mortgages -- part of a global effort after the 2008 financial crisis.

Narev said the bank, the country's largest lender, had a long-term "positive view" of the Australian economy.

"The Australian economy has some good foundations," Narev added of the outlook for the next year, noting that the Reserve Bank of Australia's decision to slash interest rates to a record-low of 2.0 percent was stimulating residential construction.

But he cautioned about risks in the short-term from global economic volatility.

The bank declared a final dividend of Aus$2.22 per share, a lift of 1.8 percent.

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