The Commonwealth Bank will face increased loan losses this financial year as a result of several exposures to company failures.
In a market update released to the stock exchange today the bank said “the group’s exposure to Lehman Brothers, Allco Finance Group and ABC Learning Centres Ltd will result in significantly higher first half provisions” however there was no evidence of systemic credit issues arising.
Overall the bank said credit quality in the group’s commercial and consumer books remained sound – with little sign of material deterioration – and its liquidity was strong.
The update followed market speculation that CBA was dangerously exposed to troubled companies which has sent its share price to its lowest price since April 2005.
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