By Jenny Ruth
Tuesday 26th January 2010 |
Text too small? |
Aegis Equities Research analyst David Ellis has upgraded his forecasts for Commonwealth Bank of Australia, which owns ASB Bank, after it issued higher than expected profit guidance.
Ellis says he had been looking for a cash net profit of about $A2.66 billion ($NZ3.38 billion) for the six months ended December. Commonwealth says it expects to report a first-half cash net profit of about $A2.9 billion.
Ellis has raised his full-year earnings-per-share forecast by 6.2% for the year ending June and his 2011 forecast by 3.7%.
"While light on detail,in our view this was a positive update by the bank with the theme from the September quarter trading update of 'improving underlying business momentum' continuing into the December quarter," he says.
Commonwealth's large retail banking franchise, strong business banking operations and its market-leading position in wealth management underpin its longer-term earnings outlook, Ellis says.
Credit conditions have started to stabilise and he expects to see further improvement which will support the bank's near-term earnings.
"We expect earnings to recover in the medium term as Commonwealth leverages its strong market positions and underlying business growth," he says.
"We expect ongoing efficiency gains, recent acquisitions and organic growth to support Commonwealth's earnings outlook."
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