Flush Cba In Expansive Mood

Commonwealth Bank of Australia (CBA) managing director David Murray, buoyant after a surprisingly strong profit result, said on Thursday that CBA had decided to expand its presence in Asia and New Zealand.

Murray also said CBA had submitted a first-round non-binding bid to buy Axiom Funds Management, which manages A$17 billion of funds and is being sold by the New South Wales state government. Weve already expanded our presence in Asia and were about to start our joint venture bank in Indonesia, but I think theres more up there for us to do and weve decided to seek out some fresh opportunities, Murray told reporters after addressing a Securities Institute function.

 

Our focus has been Indonesia, China, Vietnam and India because they are countries whose financial systems are still evolving because the Australian system, which is one we know very well, is quite mature, he said.

Were looking in each of those countries for joint venture opportunities, he said, adding such joint venture arrangements would not require significant capital injections from CBA.

CBA announced an 11 per cent rise in net profit for the six months to December 31 to A$602 million and increased its interim dividend by seven cents to 45 cents per share.

The result was well above expectations and fired a four per cent rally in CBAs share price to A$13.90. The stock closed up two cents at A$13.93 on Thursday as the overall market rallied another one percent to an all-time high.

Murray said CBA was looking to diversify and expand in New Zealand as well as Asia, and was examining acquisition opportunities and the potential for organic growth of its ASB Bank unit there.

He said CBA had been successful in New Zealand with ASB Bank, but that it still had only a relatively small presence. So if we had any opportunities to expand any further, wed like to take them, because we know the market and we think we could provide a pretty good service there, he said.

Murray agreed that the only large bank in New Zealand not already owned by CBA or its Australian competitors was the National Bank of New Zealand Ltd, which is owned by Lloyds TSB Group Plc.

Murray said CBA had enough capital on hand to handle routine expansion and therefore would continue with its current high dividend payout ratio.