CBA lifts profit to $1.9bn

Miners holding back bad news for Australian market.

Source: AFP

COMMONWEALTH Bank says quarterly cash earnings jumped 8.6 per cent, but has warned that a competitive market is putting pressure on its loan deposit margins.

Australia's biggest bank today said cash earnings had risen to $1.9 billion in three months to March, up from $1.75 billion in the same period last year. Net profit for the period was $1.9 billion, up 12 per cent.

"Revenue growth continued to reflect a combination of conservative business settings and modest system credit growth,'' the bank said today.

Commonwealth Bank in February delighted investors after beating expectations with a "cracker'' first-half result.

The bank cash profit - a measure of its underlying performance - surged 6 per cent to $3.78 billion for the six months to December. Analysts said the latest quarterly result would again please shareholders.

"Commonwealth Bank continues to deliver earnings of increasing quality and strength,'' Morningstar head of financials David Ellis said. "Quarterly earnings are in line with our expectation, and our positive view is intact."

"Our 2013 cash profit forecast of $7.5 billion needs to be reassessed with an earnings upgrade likely."

"Importantly, future dividends look increasingly sustainable.''

The bank last week passed on in full the Reserve Bank's 25 basis point interest rate cut. Commonwealth Bank shares opened more than 1 per cent higher this morning at $72.85.

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CBA lifts Q3 profit 12 per cent to $1.9B

COMMONWEALTH Bank of Australia has lifted its third quarter profit by 12 per cent to $1.9 billion.

Australia's largest home lender said market conditions remained subdued during the three months to March 31, but it managed to grow its loan and deposit portfolios above the banking industry's average rate.

CBA's unaudited net profit in the period was up from $1.75 billion in the same period last year.

The bank's cash profit in the three months to March, which excludes one-off financial items, was also approximately $1.9 billion, up 8.5 per cent on the previous corresponding period.

"Revenue growth continued to reflect a combination of conservative business settings and modest system credit growth," the bank said in a statement on Wednesday.

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Leighton lifts profit but debt is up

CONSTRUCTION and mining services giant Leighton has assured investors its finances are okay despite debt levels rising sharply in the March quarter.

While the company posted a strong net profit of $123 million for the period, the gloss was taken from it when it revealed that gearing - a measure of its borrowed money to shareholders funds - was uncomfortably high.

Gearing went back up to 48 per cent from 35 per cent after it was reduced last year, with net debt possibly as high as $1.5 billion from $900 million at the start of the year.

It has had to pay $200 million equity in the collapsed BrisConnections company behind the airport toll road and $200 million on dividends while its working capital slumped during the traditionally quiet summer holiday period.

Another problem was an increased level of net project underclaims (unsettled bills).

Leighton's deputy chief executive and chief financial officer Peter Gregg told AAP that Leighton was still on track to meet guidance of a full year profit of $520 million to $600 million and a gearing range of 25 to 35 per cent.

Its leverage will be helped when it receives about $620 million for the sale of 70 per cent of its telecommunication assets to Canada's Ontario Teachers' Pension Plan.

It also announced the $435 million sale of a Perth office development to Dexus Property on Monday.

"The ability to settle a number of claims in that Christmas period is limited by time and availability circumstances, we typically see that ramp up through the remainder of the year," Mr Gregg said.

However the company wouldn't want to let its gearing get too out of hand given a troubled recent history, Options xPress analyst Ben Le Brun said.

The company made a loss of $80 million in the March quarter last year, when it was reeling from $1 billion-plus loss in blowouts at the Brisbane AirportLink and Victorian desalination plant projects.

On Monday it announced a net profit of $123 million in the three months to the end of March.

That came during a tumultuous time when three directors, including chairman Stephen Johns, and general counsel and secretary Richard Willcock quit amid worries about greater interference from Spain's ACS, which controls the company.

Mr Gregg said while it was disappointing to see those internal issues being played out publicly, management was getting on with its job delivering profits.

He said while life was tough in the current economy, he pointed to the company still having a solid $42 billion work in hand.

Two key issues are a slowdown in the mining sector with costs soaring and cash-strapped state governments not investing in infrastructure.

Leighton lost mining contracts with Xstrata and BHP Billiton during the quarter as the miners slashed costs.

Mr Gregg said he was confident that environment would turn around and that Leighton was driving down costs by better utilising its plant and equipment assets.

Its net profit margin in the quarter rising to 2.3 per cent from 1.9 per cent for the full 2012 year, which indicates more money is being earned per dollar of sales.

Morningstar analyst Ross MacMillan said there were major concerns about how the mining slowdown would affect contractors such as Leighton.

Leighton shares were up 42 cents, or 2.21 per cent, to $19.43.

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Retirement funder lifts profit

RETIREMENT funder Challenger has lifted earnings as more people seek secure retirement income.

Challenger's normalised net profit in the six months to December was $149 million, a 17 per cent increase on the same period in the previous year.

Improving investment market conditions and growing sales of products such as annuities contributed to the result, Challenger said.

Annuities provide regular income payments in return for a lump sum investment.

Sales of such products are rising as baby boomers reach retirement age and retirees seek more secure income sources, Challenger said.

The company made a net profit of $222 million in the first half of the financial year, up significantly from $20 million in the previous corresponding period, due to more favourable valuations of its long-term investments.

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Westfield Group lifts profit

Businessman Frank Lowy. Source: The Daily Telegraph

SHOPPING centre developer Westfield Group's annual profit has grown by 18 per cent as income from its centres across the world increased.

The group, which manages 105 shopping centres in five countries, made a $1.72 billion profit in the year to December 31, up from $1.532 billion in 2011.

Joint chief executives Peter Lowy and Steven Lowy said 2012 was a year in which the company made several changes to its property portfolio as it aims to improve its returns to shareholders.

"The performance for the year has been very good and in line with expectations," they said today.

Westfield Retail Trust, which only holds interests in Westfield's Australian and New Zealand shopping centres, made a net profit of $830.8 million in the year to December, down 2.2 per cent from 2011.

The Trust's managing director Domenic Panaccio said the result showed the quality of the Trust's properties in a challenging operating environment.

Westfield Group said its operating income grew by 3.3 per cent in the 12 months to December, with growth strongest in the United States, followed by Australia and New Zealand, and then the United Kingdom.

"Our operating performance for the year saw continuing high levels of occupancy, growth in average rents and comparable specialty sales growth in each market," The Lowys said. "In Australia, whilst retail conditions have been subdued for most of the year the business has performed well."

Westfield continues to receive demand for space from both local and international retailers, they said.

Westfield completed its $1.2 billion Sydney development during 2012, and in 2013 expects to start between $1.25 billion and $1.5 billion in new developments. That will include work at Miranda in Sydney, Mt Gravatt in Brisbane and Bradford in the UK.

Westfield Group will pay 49.5 cents in distributions per security for 2012, and expects that to rise to 51 cents in 2013. Westfield Retail Trust will pay 18.75 cents per stapled security for 2012, and expects that to rise to 19.85 cents in 2013.

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AMP lifts profit in challening environment

FINANCIAL services firm AMP has lifted its annual profit by two per cent as it continues to benefit from its merger with AXA Asia Pacific.

AMP made a net profit of $704 million in the year to December 31, up from $688 million in the previous year.

The previous year's result included only nine months of contributions from AXA Asia Pacific, following the $4 billion merger between the two companies in April 2011.

AMP's underlying profit in the year to December, which excludes impacts from mergers and movement in investment markets, was $955 million, up from $909 million in 2011.

"The strong performance of our wealth management business reinforces the benefits of the merger with AXA, with a suite of contemporary products and services that cater for all key market segments, supported by Australia's leading financial advice network," chief executive Craig Dunn said in a statement on Thursday.

He said the business environment would remain challenging in 2013, but sentiment domestically and internationally was improving.

AMP declared a final dividend of 12.5 cents per share, franked to 65 per cent, the same as in the previous year.

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Melb Airport lifts numbers in Jan

MELBOURNE Airport says passenger numbers increased five per cent at Tullamarine in January.

The airport said it handled 2.6 million passengers in the first month of 2013, up five per cent from compared with January, 2012.

Domestic travellers through Tullamarine rose 6.1 per cent to 1.9 million, while international passengers rose 1.8 per cent to 679,429, Melbourne Airport said in a statement on Wednesday.

Growth at Melbourne came in ahead of Sydney Airport, which reported total passenger growth of 3.8 per cent to 3.3 million in the month.

Sydney's Kingsford Smith said domestic passengers rose 4.9 per cent to 2.1 million, while international passengers rose 1.9 per cent to 1.2 million.

Sydney Airport chief executive Kerrie Mather said growth in international passengers in January was impacted by Chinese New Year falling later in 2013, compared with 2012.

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Suncorp lifts profit during calm weather

ANOTHER period of benign weather conditions has helped Suncorp Group grow its first half profit by 48 per cent.

The insurance and banking firm made a net profit of $574 million in the six months to December 31, up from $389 million in the previous corresponding period.

Profit from its insurance operations was a main driver of the result, which at $564 million was more than three times the $162 million profit it made in the previous corresponding period.

"Up until Christmas it was good to see a set of results where we could compare results without the impact of weather," chief executive Patrick Snowball told analysts on Wednesday.

Up until December 31, Suncorp had not incurred large costs from a natural disaster since 2010 and 2011, relating to Cyclone Yasi, Queensland floods, Christchurch earthquakes and hailstorms in Melbourne in Perth.

The company has also benefited from higher premiums, particularly on home insurance.

But since the end of calender 2012, Suncorp has taken claims worth up to $270 million relating to floods caused by ex-tropical cyclone Oswald and bushfires.

That has taken total claims in the financial year to date to up to $417 million, which remains below its full year allowance of $520 million.

"Our outlook is one of cautious optimism," Mr Snowball said.

There is continued volatility in financial markets and the global economy, and there is a risk of more weather events, he said.

But Suncorp is making good progress on its transformation strategy, he said, which will deliver an additional $200 million in annual savings from the 2015/16 financial year, on top of the targeted $235 million in savings.

Analysts said Suncorp's underlying performance was strong, with growth in cash earnings, insurance margins and dividends to shareholders.

"The outlook is promising, with management committed to delivering an underlying insurance margin at or above 12 per cent, despite an increasingly competitive market and likely higher reinsurance costs and allowances for natural disasters," Morningstar analyst David Ellis said.

But Suncorp's shares fell, down 50 cents, or 4.3 per cent, at $11.17 at 1120 AEDT.

The company's fully franked interim dividend of 25 cents per share was up from 20 cents for the previous corresponding period.

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