The Tribune

Commonwealth Bank yesterday unveiled a 24.5 per cent net income drop for the nine months ended September 2012, as provisions relating to non-performing loans took their toll on the bottom line.

Despite the net income fall, from $38.7 million to $29.2 million, the BISX-listed institution’s total revenues were up 4 per cent over 2011, and general and administrative costs contained to less than a 2 per cent growth,

In a statement, Commonwealth Bank said high levels of unemployment and non-performing loans hit the bottom line.

Its executive chairman, William B Sands Jr, said: “The banking industry, and indeed the entire country, continue to be challenged by the slow pace of the economic recovery, with persistently high unemployment rates exceeding 14 per cent.

“The direct impact of this on the industry has been increasing levels of non-performing loans. Commonwealth Bank is focused on efficiency and quality. Our efficiency ratio is better than it has ever been and our loan quality remains well below industry standards with non-performing loans at 4.4 per cent of the loan portfolio. The industry average for non-performing loans at the end of September, as reported by the Central Bank, was 13.4 per cent.”

Mr Sands added: “The bank has outperformed the industry since the downturn in 2008, and continues to maintain capital and liquidity ratios well in excess of regulatory requirements. Total capital at the end of September exceeded $266 million, with the bank’s total assets at the end of September unchanged from September 2011 at $1.47 billion.”

The executive chairman added: “The economy is not expected to experience sufficient growth to have a meaningful impact on the employment levels in the short-term, or significant improvement in the levels of non-performing loans.”

With reported profits of $29.2 million, Commonwealth Bank paid its normal quarterly dividend of six cents per common share at the end of September, bringing the total dividends paid to 23 cents per share in fiscal 2012.

Mr Sands said: “Further challenges are expected in 2013, but we are pleased that we have been able to achieve very respectable results in 2012 in this environment.

“We are investing in our people and in technology. Our commitment to training and developing our staff has not changed despite the economic downturn in the economy.”