CBA unveils profit increase

The Commonwealth Bank of Australia (CBA) has announced an 18 per cent increase in half year profits to AS$2 billion.

The company, Australia's second largest bank by market capitalisation, reported that first half net profit to the end of December 2005 was boosted by strong performance in its company loans and home lending businesses and the AS$145 million sale of its Hong Kong insurance arm in July 2005.

CBA's net profit for the six months to December 31st was up from AS$1.71 billion a year earlier, at AS$2 billion, and the company opted to raise its interim divided 11 per cent to 94 cents.

Despite profits in excess of market expectations, the bank warned that growing competition in the sector is squeezing profits.

New CBA chief executive Ralph Norris said: "In a competitive market, we focused on profitable growth and all our businesses performed well. We remain on track to deliver earnings per share growth for the 2006 fiscal year which equals or exceeds the average of our peers."

Mr Norris said that he intended to focus on the bank's domestic market and ruled out a major expansion into India or increasing its holdings in China in the near future.

CBA predicts that the overall financial services market in Australia will remain "highly competitive", with growing pressure on margins.

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