Business

Australia's biggest bank posts flat quarterly profit

comm bank Image copyright Getty Images
Image caption Commonwealth Bank of Australia is the country's biggest lender by market value

Commonwealth Bank of Australia (CBA), the country's biggest bank by market value, has posted a quarterly cash profit that is unchanged from the same period a year ago.

The lender's third quarter cash profit for the three months to the end of March was about 2.2bn Australian dollars ($1.74bn; £1.15bn).

CBA said the flat result was due to higher regulatory costs.

But analysts said the bank may still deliver a record full-year cash profit.

The lender's net profit for its third quarter was also approximately $A2.2bn.

Many Australian banks use a cash profit result rather than net profit as their preferred performance measure. The cash profit numbers strip out one-off items, including those that may introduce distortions to a bank's performance in a given period.

CBA's first-half cash profits posted earlier this year came in at 4.62bn Australian dollars, 8% up from the same period a year earlier.

CBA's figures were unaudited and came with limited information, but they follow disappointing half-year figures from rival Westpac.

They also follow half-year results from ANZ, which were described by analysts as a welcome relief after the disappointing Westpac numbers.

National Australia Bank, which is the country's number one lender by assets, is also expected to file its half-year results this week.

Big banks

Image copyright Getty Images
Image caption The country's big lenders are facing increased regulatory controls amid rising property prices.

National Australia Bank, Westpac, ANZ and CBA make up the so-called big four lenders in Australia.

They are regarded as highly profitable and came out of the global financial crisis relatively unhurt.

However, there are concerns that Australia's big lenders rely too heavily on their home lending businesses.

In a statement to the Australian Securities Exchange, CBA said its home lending volume growth "continued to track slightly below system", but that growth in household deposits was "particularly strong" in the quarter.

The country's big lenders are also facing increased regulatory controls amid rising property prices.

In a report published last year, Australian lenders were told they needed to hold more capital to be able to survive future financial crises.

The Financial System Inquiry report singled out bank competition, increased capital levels and inefficient taxes for reform.

The Reserve Bank of Australia (RBA), the country's central bank, cut its key interest rate on Tuesday by 25 basis points to an all-time low of 2%, with rising property prices in Australia's biggest city, Sydney, one of the reasons for the cut.

A strong currency and a drop in iron ore prices were also among the reasons for the cut, which is the second this year, following a previous 25 basis point cut in February.

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