CBA Earnings

I think something along the following lines may have been posted earlier in the week but here it is any way.


SYDNEY, Aug 16 AAP - Commonwealth Bank of Australia Ltd is not
expected to reach its target of double digit earnings per share
(EPS) growth when it reports its full year profit results next
week.
Australia's biggest mortgage lender forecast earlier this year
that it would be able to produce double digit cash EPS growth,
providing there was a reasonable outcome on bad debts and equity
markets.
But equity markets have remained in turmoil this year, and as a
result analysts do not expect the bank will be able to meet its
target when it reports its full year results on Wednesday.
CBA's smaller rival Westpac Banking Corp warned earlier this
month that its double-digit EPS target for the second half of 2002
would be a stretch because of weaker equity markets.
Wilson HTM banking analyst Brett Le Mesurier expects CBA will
"just fall short" of achieving double digit EPS growth.
"The primary reason for not achieving it is poor investment
returns on net assets (shareholder funds) invested in the life
insurance business," he said.
"Had they had decent returns they would have got their double
digit (growth)."
The bank also might have difficulty in substantially improving
its net profit result from last year's $2.398 billion, let alone
the record $2.7 billion it reaped for 1999/2000.
Analysts appear divided on their net profit forecasts for the
full year to June 30, with some forecasting about $2.4 billion and
others around $2.2 billion.
However, the bank's bad debt pile is not expected to have grown
significantly despite it confirming recently that it would have a
small exposure to collapsed US telco WorldCom.
JP Morgan banking analyst Brian Johnston said CBA would, unlike
the other major banks, benefit from the recent interest rate rises
because of its large portfolio of pensioner deeming accounts.
"Their spread sheet performs better with interest rate rises and
there's also some account keeping changes coming through and
significant cost saving initiatives they are bringing through," he
said.
Mr Johnson said CBA might also announce some sort of capital
management initiative, possibly plans to issue debt to help fund a
share buyback or issue converting preference shares to
recapitalise.
Another analyst said he expected the interest rate rises to keep
CBA's margins stable and that the bank would have seen some growth
in home loan volumes thanks to a range of price discounting
initiative.
"Loan growth would have been moderate in the second half in line
with the first half ... but year on year there should be a good
acceleration in loan growth," he said.
"Fees will probably be down, but they'll be of much higher
quality because they had a fee repricing much earlier in the year/
"The first half had a lot of sales of fixed assets and
investments which are not recurrent, so there will be a lower
number in non interest income expected."
Analysts have also highlighted that some benefits should be
starting to emerge from the bank's restructuring program.
AAP