Commonwealth Bank of Australia (CBA) has reported an 8 per cent lift in profit to $2.37 billion for the six months to December 2007.
Net profit for CBA's wealth management business, which includes Colonial First State (CFS), jumped 27 per cent to $380 million.
The bank recorded $100 million in extra funding costs for the period on the back of increased volatility and higher interest rates.
"The last six months has been challenging for global banking and wealth management as the sub-prime assets crisis in the US has unfolded," CBA chief executive Ralph Norris said.
Funds under advice (FUA) for wealth management grew to $200 billion on the back of net inflows to the FirstChoice platform and institutional mandates given to CFS' Global Asset Management business.
Net inflows to its FirstChoice platform rose to $3.5 billion for the half year, bringing its FUA to $42 billion.
Wealth management was also looking to expand into new countries, Norris said.
The number of planners increased by 38 for the period.
The bank expected volatility to continue as the full impact of the sub-prime crisis was revealed, Norris said.
"For the Australian economy this is likely to mean that wholesale funding costs will remain above levels in the 2007 financial year and inflation will continue to be a concern," he said.
"This is expected to lead to further upward pressure on interest rates."
The bank boosted its dividend by 6 per cent to $1.13 per share.
CBA's shares declined 6.5 per cent or $3.20 to end at $46.20 yesterday.
