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• MPA Online

CBA's end of financial year profits have been labelled a 'double-edged sword' by the FBAA.

CBA announced full-year after-tax profits of $5.7bn - a 20% increase on the previous year and a record for an Australian bank. The announcement has drawn criticism of the bank, with a number of commentators accusing it of excessive profiteering.

FBAA president Peter White said the bank was in a 'catch-22 situation'.

"We have to have a healthy banking sector, and we need our banks to be profitable," he told Broker News. "The announcements we've seen from banks all week certainly show that Australian banks are healthy. "However, I'm not surprised that people have criticised the bank: coming out of the GFC and posting a 42% increase in cash profits while many people are still hurting is going to provoke anger."

He also raised concerns that the bank's profits had come at the extent of brokers.

"CBA wrote around $90bn in new loans, and brokers have contributed about 40% of those. We've seen commissions clipped and volume hurdles introduced – it can feel like CBA is  hammering one of the channels that supports the bank most."

The bank saw growth across the board, with retail banking services showing a cash net profit after tax of $2.5bn - an increase of 17% on previous years. Average home loan volume growth was 18% which the bank said was driven by "competitive customer interest rates and strong growth in the first home buyer market". It also highlighted that lower loan impairment expenses had contributed to the profit, and reflected "a continuing improvement in portfolio quality".

CBA chief executive Ralph Norris attributed the record profits to the bank's "unrelenting focus over the last four years on our customers and our people". He warned that underlying business activity is likely to be softer than anticipated in the next six months due to lower business and consumer confidence in the face of economic volatility in Europe and the US.

 

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