Despite the current market volatility, the Commonwealth Bank’s (CBA) Wealth Management business expects to deliver strong growth over the medium term.
The business generated $380 million in profits after tax for the first half of the 2008 financial year, which is an increase of 27 per cent from last year. This revenue represents 16 per cent of CBA group’s overall profit.
The Wealth Management arm now represents one of the fastest growing parts of the CBA group, Wealth Management group executive Grahame Petersen said.
“We have a very strong distribution footprint and that’s held us in good stead in these tough times. While other people’s flows have been struggling, ours have remained positive,” he said.
The underlying fundamentals in Australia are strong and the wealth management industry is a very attractive segment to participate in, according to Petersen.
“We’ve got compulsory superannuation, a number of people in both pre-retirement and early retirement seeking advice due to the baby boomer bubble and we still have significant underinsurance gaps across large parts of the economy,” he said.
“The reason that I remain confident about CBA’s wealth management business doing particularly well in this environment is that we’re a people business.” Petersen said.
The CBA’s Wealth Management business comprises Colonial First State (CFS), CFS Global Asset Management and CommInsure.
