Commonwealth Bank posts record cash profit of $7.11 billion Midday roundup

The Commonwealth Bank is positive about its medium to long-term outlook after posting a record cash profit of $7.11 billion.

The profit after tax of $7.11 billion for the full year to June 30 was a rise of 4% on the previous corresponding period.

Net profit lifted 11% to $7.09 billion and the bank will pay a final dividend of $1.97, 5% higher than last year’s payment. The figure takes the bank’s total dividend to $3.34.

Group chief executive Ian Narev said it was a good result given the uncertain environment in which the bank is operating.

“As expected, revenue growth was subdued, reflecting ongoing caution from both our retail and corporate customers,” he said.

“This translated into lower credit growth and greater pressure on market sensitive businesses. In addition, higher funding costs have put pressure on margins as competition for domestic deposits intensifies and wholesale funding continues to be expensive.”

Consumer sentiment falls 2.5%

The Westpac/Melbourne Institute Index of Consumer Sentiment fell 2.5%t to 96.6 in August, from 99.1 in July.

Westpac’s chief economist Bill Evans said the fall was a “disappointing result”, with this being the sixth consecutive month the index has registered below 100, averaging 96.2.

“Both federal and state governments are entering into substantial fiscal consolidations,” Evans said.

He said while the Reserve Bank did not surprise by holding rates steady at its August Board meeting, consumer perceptions of the outlook for interest rates have shifted.

“Media reports that the Reserve Bank may have decided against future rate cuts are likely to have
unnerved households,” Evans said.

“For example, despite rates staying on hold the confidence of respondents who hold a mortgage fell by 3.9%.”

High Court allows plain packaging for cigarettes

The Federal Government has succeeded in its High Court case against the cigarette companies with the court ruling the government’s world-first plain packaging laws are constitutionally valid.

The legal victory means all cigarettes and tobacco products will have to be sold in plain olive-brown packs from December.

Large graphic health warnings will dominate the packs and the manufacturers’ brand names – such as Camel or Winfield Blue – will be written in a small generic font.

Stock market stronger

The Australian stock market has opened stronger, despite flat leads from Wall Street overnight after US stocks pared early gains to close little changed.

At the official market open, the benchmark S&P/ASX 200 index rose 0.38 to 4308.7 points and the broader All Ordinaries index gained 0.36% to 4332.8 points.