THE NEWS WRAP: Commonwealth Bank profit surges 16% to $4.2 billion

The Commonwealth Bank has reported its profits have surged 16% to $4.2 billion during the December half.

 

The result was helped by an 8% increase in revenues, along with a large, ongoing cost-cutting program.

 

“This result again demonstrates the benefits of our long-term strategic priorities – people, technology, strength and productivity,” chief executive Ian Narev says.

 

“Our on-going productivity initiatives have helped us maintain our expense discipline and, at the same time, deliver revenue growth. So, we have again been able to invest for the long term benefit of the business, with nearly $600m of investment in this half.”

 

IMF warns Aussie dollar needs to fall to US80 cents

 

The International Monetary Fund has warned that Australia’s non-mining sectors will continue to be at risk unless the Australian dollar falls to between US85 and US80 cents.

 

“Australia’s floating exchange rate has been a vital shock absorber for the economy during the upswing of the mining investment boom,” the IMF report says.

 

“[However, as mineral prices fell], the exchange rate did not depreciate as would normally be expected.”

 

Consumer sentiment slumps again

 

Consumer sentiment has slipped back to pre-election levels, with the Westpac-Melbourne Institute Index of Consumer Sentiment falling to 100.2.

 

A score above 100 means the number of optimists exceeds the number of pessimists, with the latest figure down 10% from the September election and 3% down on last month.

 

“The difference between the current conditions index and the expectations index widened further and is now at its highest level since June 2000,” Westpac chief economist Bill Evans says.

 

“Specifically, the component of the index measuring consumers’ expectations for the economy over the next 12 months is at its lowest level since March 2012 and the less volatile component tracking consumers’ expectations over the next five years is at its weakest since February 2009.”

 

Overnight

 

The Dow Jones Industrial Average is down 0.19% at 15,963.94 points. The Aussie dollar is down to US90.32 cents.

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