Can someone, anyone, please explain to me why liability management is no longer a part of banking? That seems to be what CBA Chairman David Turner thinks. In his address to shareholders today he said:
Ladies and Gentlemen, I am very pleased that we have had another very good result. And this is notwithstanding the difficult environment in which we’ve been operating. This result is largely thanks to two things:
1. Our single-minded strategy of delivering even better customer service.
2. And the strong management of the group.
I will return to express our gratitude to Ralph Norris later. But Ralph would be the first to acknowledge that he has not done it alone. And it’s the efforts of his excellent senior executive team, supported by each of our 52,000 employees, that have enabled us to generate this good result.
We increased the dividend per share by 10%, and we paid a total of $3.20 per share for the full year. Dividend payments for the 2011 financial year totalled $5 billion, with over 80% going directly or indirectly to Australian residents. This is all in the context of a world in which there is continued uncertainty.
But against this backcloth, we have adopted a conservative stance and our strong financial position remains a priority. Throughout the global financial crisis, and beyond our cautious approach to capital, provisioning and funding meant that we were able to support our 11 million customers in the most challenging of times.
In fact that over the last year we have advanced almost $90 billion of new loans to our customers, and $200 billion over the last 2 years. This demonstrates our ongoing commitment to them and to the Australian economy generally. We pay considerable tax, and through our size, we support a wide range of Australian businesses. As you can see, we have a very strong Tier 1 capital ratio. This means that we are well placed to meet the impending Basel III capital requirements. And we are one of a handful of global banks to have retained a AA credit rating.
We remain well funded. The combination of strong deposit growth from our customers and subdued credit growth has seen us satisfy our lending from customer deposits which now comprise 61% of the Group’s funding. This strength has helped us to support the wider community. We’ve done so through a wide-range of charitable donations, sponsorships and other activities.
This year, in addition to our regular commitments, we’ve been able to provide help for communities in Queensland, Victoria and Christchurch who have had the appalling bad luck of being impacted by completely unforeseen natural disasters. More generally, while news over the past 2 weeks has been more positive,there are ongoing worries about the impact of both Government cut backs and sovereign debt in Europe.
Under these circumstances and given the sheer cost of refinancing banks, growth forecasts for that region are low. Even on an optimistic forecast, it seems most unlikely that there will be are turn to accelerating growth in the near future. The same might be said for the USA, but with a flexible labour force,productivity improvements and entrepreneurship at the heart of business,there must be greater hope of a positive outcome in the medium term.
All of this will of course challenge Australia, and we are not immune to vagaries elsewhere in the world. Wholesale funding markets will become more challenging and have the potential once again to place sustained upward pressure on Group funding costs.
You’d have travel a long way to find a more contradictory address than that. The bank is strong and well funded, as well as facing “sustained upward pressure on Group funding costs”. Not that that is the responsibility of the bank. It’s Europe, don’t you know. Just as it was the US in 2008.
Hope you’re listening mortgagor and tax payer.