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1999
Cba Under Pressure Amid Fears Of Lower Wealth Returns
Sydney Morning Herald
Tuesday February 11, 2003
Investors remain nervous about the message Commonwealth Bank's first-half earnings will contain about the health of Australia's wealth management and life insurance business.
Shares in Commonwealth Bank yesterday fell 22c to $26.25 ahead of tomorrow's profit announcement.
Analysts are expecting the bank to report a net profit of about $1.1 billion for the six months to December 31, compared with $1.2 billion in the previous corresponding period.
CBA chairman John Ralph issued a warning at the annual meeting on November 1 that growth in first-half operating earnings would be flat and full-year profit growth modest because of lower returns.
Global sharemarkets fell significantly in the final two months of 2002.
On this basis, analysts forecast that first-half comparative earnings would be lower and expect the bank to lower its valuation of its Colonial First State investment by as much as $2 billion.
A write-down would have no impact on capital or cash earnings per share but such a move could spark restatements by Westpac and ANZ after they rule off their accounts on March 31.
ABN Amro analysts said investors would look for certainty that earnings from core banking business remained intact.
Any write-down that did not exceed $1.5 billion would be within market expectations and would be positive for the bank's share price.
Most banking analysts expect CBA to confirm the go-ahead of a $500 million hybrid issue to fund a share buyback.
Analysts expect the Commonwealth to confirm Colonial restructuring costs of about $150 million in the first half and $100 million in the second half.
``Other areas of interest recently have been heightened senior management turnover," said a Deutsche Bank report.
``The bank is yet to appoint a head of the insurance and investment services business, previously headed by Peter Polson who left the bank in October 2002.
``Chief financial officer Stuart Grimshaw is currently filling the role."
© 2003 Sydney Morning Herald