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Commonwealth Bank of Australia said bad debts rose almost five-fold to A$1.6 billion ($2 billion) as loans to failed companies including ABC Learning Centres soured.
Net income rose 9 per cent to A$2.57 billion in the six months to December 31, it said yesterday, buoyed by the acquisition of HBOS's Bankwest unit. Net income excluding a one-time gain of A$547 million fell 16 per cent to A$2 billion.
The Sydney-based company maintained its first-half dividend at A$1.13, the first time it hasn't increased the payout since at least 2002.
Chief executive Ralph Norris has sold more than A$10 billion in debt and shares in the last four months to shore up finances as the credit crisis sparks writedowns and losses. The bank's bad debts are rising as companies including ABC Learning, Allco Finance Group and Babcock & Brown collapse, while loans growth is slowing along with the economy.
"The increase in provisioning follows a recently completed comprehensive review of our lending portfolio," Norris said. "Given volatility and the uncertain environment, loan impairment will be a continuing focus."
Rivals National Australia Bank and ANZ last week said rising bad debts were eroding profit growth as losses spread from financial markets.
- BLOOMBERG
