CBA Record Profit
The Commonwealth Bank of Australia has announced a record profit of $1.42 billion after tax.
Whilst the profit level was a record, this had been anticipated and second half cost increases, mainly in IT and a slow down in second half revenue, had dampened the result.
However most of this expense rise has been in the start up of CBA's push into the online services area which they are hoping will bring in future revenue far outweighing this initial cost.
Not suprisingly the banks net interest rate margin stabilised in the second half and income from transaction and lending fees continued to rise. This reflects the overall nature of the retail market where margins have been cut to the bone with no real further downside and the move towards a user pays system for customers.
Overall the bank will be satisfied with the level of profit, but will realise that in the current environment of minimal defaults and bad debts and a relatively strong economy, anything less would have been extremely disappointing. Next years challenges appear to lie in facing the prospects of an increasing interest rate environment, a slowing economy, keeping costs flat and hoping the online investment starts to pay off.