Commonwealth Bank of Australia (CBA) said earnings within its wealth management and private banking units were up strongly in the six months to December 2009 as investment markets recovered.
Wealth management, which includes Colonial First State (CFS), Colonial First State Global Asset Management and CommInsure, reported cash profit of $379 million, a 113 per cent surge from the prior comparative period.
The results were primarily driven by improved investment markets and the unwinding of unrealised mark-to-market losses on the valuation of assets backing CommInsure’s Guaranteed Annuities portfolio, CBA said.
Funds under management as at 31 December was $149 billion, up 16 per cent on the prior comparative period. CFS’s FirstChoice and Custom Solutions platforms saw positive net flows of $1.9 billion over the period.
Additionally, 37 BankWest advisers were transferred into the CFS Advice business in order to align all advice activities across the group, CBA said. CBA acquired BankWest from Halifax Bank of Scotland for $2.1 billion in 2008.
CBA’s Private Bank income increased 10 per cent on the previous corresponding period to $119 million.
“This result has been driven by growth in the lending book together with increased cross sell of financial advisory services, which generated a 19 per cent increase in funds under administration,” CBA said.
CBA reported overall cash net profit of $2.94 billion for the six months to December 2009, a 54 per cent jump from the same period last year.
CBA chief executive Ralph Norris said that while he’s optimistic about the medium-term outlook for the Australian economy and CBA, there are still some risks from international volatility that could affect short-term performance.
“Clearly there is still some uncertainty about the speed of recovery for the global economy and, perhaps more importantly for Australia, the performance of our major trading partners, notably China and the United States,” he said.
