Banks Announce Healthy Results
In many parts of the world, finance remains in considerable distress, but Australian banks and insurers have posted good results in the face of continued global weakness, according to several recent announcements.
Commonwealth Bank (CBA), announcing combined results for Australia and New Zealand, reported a 12% increase in annual insurance income, to $960 million, as of the end of the second quarter of 2012, supported by a 10% increase in premiums in force, which stand at $2.27 billion.
In Australia, where insurance operations are the province of CBA Wealth Management, net profits decreased 11% to $569 million, a drop attributed to weakness on the global investment front. Inforce premiums, however, grew 20% to $1.97 billion. At CommInsure, new sales of retail life products grew 21% to $216 million, and premiums for wholesale life products grew 41%, reaching $651 million.
At the same time, lapses and higher claims cut into profits in Australia, with lapses in retail life up 29%. CommInsure posted income of $691 million, an increase of 11%, accompanied by a 3% drop in after-tax profit, which fell to $246 million.
According to Craig Dunn, CEO of AMP, the company’s underlying business is strong, with after-tax profits for the six months ending 30 June increasing 21%, to $176 million, over the equivalent period in 2011.
Both individual and group life premiums grew, with individual premiums up 7% and group premiums up 6%. Lapse rates also rose, however, from 11.5% to 12.9%, an increase the company attributed to a difficult economic environment. AMP’s overall profit grew 11% to $383 million.
According to AMP, integrating its AXA acquisition should be completed six months ahead of schedule and is now expected to generate benefits to the company that are $10 million more than originally forecast. At the same time, the cost of implementing My Super and Future of Financial Advice regulations, originally estimated at $52 million, is now expected to rise as high as $75 million.
ANZ did not detail its results, but CEO Mike Smith indicated that the bank was performing well, pointing to a 10.3% increase in after-tax profit, to $4.4 billion on an unaudited basis, for the nine months ending 30 June. Smith noted that the bank has benefited from gains in market share and increased productivity in its Australian operations. The bank announced that its OnePath division saw a slight decrease in revenue, but it did not offer specifics.
At NAB Wealth, unaudited quarterly results also improved. For the second quarter of the year, inforce premiums increased over the first quarter, and net profit reached $1.2 billion, while cash earnings were unchanged at approximately $1.4 billion. The quarter saw little change in net claims.