In­surer up for sale Bank in talks with po­ten­tial buy­ers of trou­bled off­shoot

Townsville Bulletin - - NEWS - STU­ART CONDIE

COM­MON­WEALTH Bank may sell its Com­mIn­sure life in­sur­ance busi­ness af­ter it beat an­a­lyst ex­pec­ta­tions with a full- year cash profit of $ 9.88 bil­lion.

CBA, which lifted its profit 4.6 per cent to an eighth straight an­nual record, yes­ter­day said it was in talks with po­ten­tial buy­ers.

An­a­lysts had ex­pected a 12- month cash profit of about $ 9.8 bil­lion.

“Com­mon­wealth Bank’s per­for­mance this year has again con­trib­uted to the fi­nan­cial well­be­ing of our cus­tomers, share­hold­ers, our peo­ple and the Aus­tralian econ­omy,” chief ex­ec­u­tive Ian Narev said.

“This is the re­sult of our con­sis­tent fo­cus on cus­tomer sat­is­fac­tion, in­no­va­tion and fi­nan­cial strength.”

CBA de­clared a fully franked fi­nal div­i­dend of $ 2.30 per share, up 8c on last year and tak­ing its 12- month pay­out to $ 4.29. The bank in­tro­duced a dis­counted div­i­dend rein­vest­ment pro­gram, which should help it build cap­i­tal re­serves to help meet the Aus­tralian Pru­den­tial Reg­u­la­tory Author­ity’s def­i­ni­tion of “un­ques­tion­ably strong”. Profit from its re­tail bank­ing unit jumped 9 per cent to $ 4.964 bil­lion, while busi­ness bank­ing was close be­hind with an 8 per cent rise to $ 1.639 bil­lion.

Mort­gage repric­ing in re­sponse to reg­u­la­tory in­ter­ven­tion in the home loan mar­ket con­trib­uted to a sec­ond­half cash profit of $ 4.97 bil­lion. But higher fund­ing costs and com­pe­ti­tion for mort­gage cus­tomers more than off­set those gains, push­ing net in­ter­est mar­gin down 0.03 per­cent­age points to 2.11 per cent.

Statu­tory profit for the 12 months to June 30 rose 7.6 per cent to $ 9.93 bil­lion.

Com­mon­wealth Bank says third par­ties are in­ter­ested in ac­quir­ing NZ in­sur­ance busi­ness Sov­er­eign and lo­cal unit Com­mIn­sure, which has been be­set by con­tro­versy.

The cor­po­rate watch­dog in March cleared Com­mIn­sure of al­le­ga­tions its man­agers pres­sured doc­tors to al­ter med­i­cal opin­ions so it could deny claims but said some prac­tices were “out of step with com­mu­nity ex­pec­ta­tions”. “Com­mIn­sure and Sov­er­eign are strong busi­nesses with scale, ex­per­tise, com­pet­i­tive prod­ucts and ac­cess to at­trac­tive dis­tri­bu­tion chan­nels,” CBA said yes­ter­day.

“While the dis­cus­sions may lead to the di­vest­ment of those busi­nesses, we will also con­sider a full range of al­ter­na­tives, in­clud­ing re­tain­ing the busi­nesses, rein­sur­ance ar­range­ments or other strate­gic op­tions.”

Big Four ri­vals ANZ and Na­tional Aus­tralia Bank have al­ready cut their ex­po­sure to wealth man­age­ment.

Re­mu­ner­a­tion de­tails for Mr Narev and his ex­ec­u­tive team will be in­cluded in next week’s an­nual re­port.

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