Commonwealth Bank of Australia (CBA) will not cut jobs or restructure its wealth management arm as it is poised to become one of the lender's biggest profit drivers, chief executive Ralph Norris said yesterday.
"I have to say that we look at our businesses on a long-term sustainable basis. So to take a [view] that would damage the [wealth management] business for a short-run benefit is something that we would not be doing," Norris said.
"And I'm confident that over the cycle our wealth management business will grow at a faster rate than our banking business."
CBA's wealth management arm - which includes Colonial First State (CFS), Commonwealth Financial Planning and CommInsure - posted an 18 per cent jump in underlying net profit to $740 million for the year to June 2008.
The result was underpinned by CommInsure's 22 per cent surge in in-force premiums to $1.25 billion, while CFS' funds under administration gained 8 per cent to $191.30 billion.
However, Norris acknowledged wealth management earnings growth had been slower than in recent years, as the S&P/ASX 200 entered a bear market after the United States sub-prime crisis sparked unprecedented volatility.
"The past six months have been difficult for the funds management sector with investment returns adversely impacted by the downturn in global and domestic equity markets," he said.
"Nevertheless, the group has performed very well relative to its main competitors with net inflows remaining positive and our flagship retail platform, FirstChoice, continuing to gain market share."
CBA also announced its retail banking arm profit advanced 8 per cent to $1.9 billion for the 12 months to June 2008, the third worst performer of the lender's main units.
The bank reported an overall 5 per cent rise in cash net profit to $4.73 billion.
