Commonwealth Bank reports peak in bad debts

Commonwealth Bank said its unaudited cash profit was around 1.4 billion Australian dollars (US$1.29 billion) for the three months ended Sept. 30, according to the Wall Street Journal.

That was around 27% higher than the A$1.1 billion (US$1.02 billion) cash profit the group said it recorded a year ago, and around a third of the A$4.42 billion ($4.1 billion) cash profit--a smoothed measure which strips out volatile items--it reported for the full year to June 30, 2009. The bank didn't disclose its net profit for the quarter.

Impairment charges for bad loans were around A$700 million (US$650 million) for the quarter, with credit quality trends moving in line with expectations, and executives said the bank has likely reached the top of the bad-debt cycle.

Chief Executive Ralph Norris noted that Australia's economic picture has improved in recent months, with unemployment unlikely to reach previously forecast peaks and the domestic economy still growing, while consumer sentiment has rebounded quite strongly.

But he cautioned that clouds remain on the horizon, with the operating environment still challenging and the pace and extent of the economic recovery still unclear.