I dont wont rain on your party BUT they may dissapoint.I have...

I dont wont rain on your party BUT they may dissapoint.

I have some CBA as well...............

Commonwealth Bank 2nd-Half Profit May Rise 1% to A$1.27 Billion
By Kevin Foley


Sydney, Aug. 15 (Bloomberg) -- Commonwealth Bank of Australia's second-half profit likely rose 1 percent, less than forecast by Chief Executive David Murray in May, after weak insurance earnings reined in higher fee income and lower expenses.

Net income, to be reported Wednesday, probably rose to A$1.27 billion ($683 million) in the six months to June 30, according to a Bloomberg News survey of eight analysts. Estimates ranged from A$1.18 billion to A$1.33 billion.

``Lower investment earnings mean the bank won't meet profit guidance targets,'' said Adrian Mulcahy, who manages A$350 million at Perennial Investment Partners and owns Commonwealth shares. ``But that doesn't mean we'll sell the stock.''

Australia's second-largest lender has levied more fees to boost revenue and is cutting costs to regain momentum after its A$9.4 billion purchase of Colonial Ltd. two years ago. That was paid for with stock, causing earnings-per-share growth to lag Westpac Banking Corp. and Australia & New Zealand Banking Group Ltd.

Per-share profit fell 35 percent to A$1.90 in fiscal 2001, compared with a 16 percent rise at Westpac and a 10 percent gain at Australia & New Zealand Banking Group. National Australia Bank Ltd.'s EPS fell 40 percent last year after it booked $2.2 billion of charges at its HomeSide Lending Inc. unit.

New account-keeping fees since April will reap A$300 million of revenue a year if levied on half the bank's 10 million accounts.

The bank's also targeting A$450 million a year in savings from combining Colonial, which has resulted in 290 branch closures and the loss of 2,350 jobs. It said last month it will fire a further 400 workers from its branch network.

Murray had forecast full-year earnings growth of at least 10 percent, subject to stronger equity markets. With Australia's S&P/ASX 200 Index down almost a tenth this year, that target won't be met, analysts said.

`Very Disappointing'

``It will be a very disappointing wealth management performance because of lower investment earnings and the impact of weak markets on operating profit,'' said Deutsche Bank analyst Ross Brown, who rates the bank ``market perform.'' He expects lower costs in the banking business, good growth in fee income and fewer bad debts.

No large provisions have been flagged since the bad-debt charge jumped 59 percent to A$290 million in the first half because of unpaid loans to Enron Corp. and zinc miner Pasminco Ltd.

The Sydney-based bank is Australia's biggest domestic money manager overseeing A$103 billion of funds, or 15 percent of its home market, after buying Colonial in 2000. That purchase also made it the nation's No.2 retail life insurer with A$3.4 billion, or 15 percent, of policies, and gave it insurers in Hong Kong, China, Vietnam, the Philippines and Indonesia.

Life Insurance

Life insurance income in Australia, New Zealand and Asia will restrain group profit again, analysts said, as in the first half, when it fell 22 percent to A$121 million as investment earnings slumped by almost half.

``The result will be flat, second half on second half, because of lower equity market earnings at its life business,'' said JBWere Ltd. analyst Leigh Cronin. He cut his full-year cash earnings forecast by 3.5 percent to A$2.39 billion last month and rates the bank ``hold.''

The bank is expected to pay a second-half dividend of 79 cents per share, up from 75 cents last year.

Its stock fell 0.3 percent to A$31.85 Wednesday. It's risen 6.4 percent in the year-to-date, after reaching a record A$34.94 in June.

``The most important thing is cost-cutting,'' said Morgan Stanley analyst Andrew Fleming, who has a ``hold'' rating on the bank. ``That's the single biggest driver of profitability in the next two years.''

Commonwealth earned A$1.2 billion in the six months to Dec. 31 and A$1.26 billion in the second half of fiscal 2001.