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Commonwealth Bank boosts net profit 16%

Australia's second largest bank, Commonwealth Bank of Australia, has reported net profit after tax for the 12 months to June 30, 2006 of $3,928 million, thanks to strong returns from its domestic lending business and funds management arm.

The firm’s Australian retail banking business performed well with underlying net profit after tax up 13%, Commonwealth said in a statement. Home loan revenues in particular, were up 16% on the prior year. Deposit balances grew with Netbank Saver continuing to attract good inflows with approximately 63% being new funds to the bank. Personal lending and credit cards were said to be competitive.

The premium, business and corporate & institutional businesses delivered a solid result driven by moderate revenue growth and good expense control. Demand from the corporate sector drove an increase of 18% in lending and finance assets during the period.

However, fund management produced an outstanding result, the bank said. Underlying net profit before tax increased 23% over the prior year to $563 million.

And Commonwealth’s insurance business delivered a 38% increase in underlying net profit after tax to $215 million. The result was underpinned by solid inforce premium and operating growth in Australia and positive experience variations and good expense control in New Zealand.

The bank’s board has declared a record final dividend of $1.30 per share – a 16% increase on last year’s final dividend. This will take total dividends for the year to $2.24 per share – up 14% on last year.