SYDNEY: Australia's biggest company Commonwealth Bank on Wednesday posted a record first-half cash profit on the back of strong growth in home lending.
The two percent lift to Aus$4.91 billion (US$3.76 billion) for the six months to December, a measure preferred by financial institutions, was slightly above analysts' expectations.
Net profit was up six percent at Aus$4.90 billion year on year.
Chief executive Ian Narev said the nation's largest lender was conservatively managing its balance sheet and spending as it tried to navigate global volatility.
But he added that the outlook for the Australian economy appeared more positive.
"The combination of geopolitical volatility and weak economic recovery in parts of the world means the risk of market volatility, and indeed economic shock, remains heightened," Narev said in a statement.
"Our job as a major financial institution is to maintain a focus on the long term, whilst ensuring that we can withstand nearer term shocks."
The Commonwealth -- the first of the country's big four banks to report half-yearly earnings -- declared a one percent rise in the interim dividend to Aus$1.99 cents.
Shares in CBA rose 2.49 percent to Aus$84.69 in mid-day trade in Sydney.
"Relative to expectations, this is a good-quality result," IG Markets chief strategist Chris Weston told AFP.
"It was a bit of a beat on cash earnings, which was obviously well-received... the dividend at Aus$1.99 was slightly above (expectations) and the management are very confident in their capital position."
House price growth has continued apace in major Australian cities such as Sydney and Melbourne, with interest rates cut to record lows by the central bank to boost non-mining sectors following the end of an unprecedented resources investment boom.
The retail banking division drove the rise in cash profit, strengthening by nine percent from the previous period to Aus$2.47 billion, backed by strong home loan growth.
Net interest margins -- the gap between interest income generated by banks and the amount of interest paid out and an important benchmark of bank profitability -- fell four basis points to 2.11 percent owing to higher funding costs.
"Overall, the result was slightly stronger than expected driven by higher non-interest income and lower bad debt charges," Regal Funds Management senior analyst Omkar Joshi said in a note.
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