Commonwealth Bank shares jump 3.7% after first-quarter update

Monday 9th November 2009

Commonwealth Bank of Australia reported a cash profit of A$1.4 billion for the first quarter and said economic conditions have improved since that nation’s biggest lender posted its full-year results.

Shares of the bank climbed 3.7% to A$54.63 and have soared 82% this year as its quarterly update stoked optimism Australian financial companies have come through the worst of the downturn relatively unscathed.

“Whilst the economic outlook has improved since our results in August, the pace and extent of the recovery remains unclear,” chief executive Ralph Norris said in a statement. “We will therefore continue to retain our conservative business settings until such time as a sustained improvement is evident.”

Norris said wealth management was the best-performing division in the first-quarter, helped by the rebound in equity markets, with fund flows rising 8.3%. The rally may not be repeated, he said.

Charges for bad debts of about A$700 million showed trends in credit quality were "generally moving in line with expectations." The lender’s Tier 1 capital ratio was 8.7% at Sept. 30.

Commonwealth Bank gave no specific details for its ASB unit in New Zealand but said operating conditions remained difficult though the domestic economy is showing signs of improvement.

ASB’s home lending and deposits grew in the first quarter though lenders had to compete for New Zealanders’ savings, which squeezed margins.

Businesswire.co.nz

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