CBA has told its shareholders that it expects to post a 44 per cent rise in first-half profit.
The announcement came just two minutes before the close of trade on Friday, causing the major’s stock price to surge 3 per cent.
The profit upgrade, which equates to approximately $200 million, is expected to be the first in a series of positive earnings announcements from the banking sector.
According to a report in The Australian, CBA’s profit upgrade comes as a result of a $240 million after-tax turnaround in its “investment experience” as well as a drop in provisions for bad debt compared with the previous first half, when bad debts increased to $1.6 billion.
At the end of September last year, CBA had $190 billion in funds under management, with a residential mortgage book of $304 billion and corporate loan book of $95 billion.
AMP’s head of investment strategy Shane Oliver said CBA’s profit upgrade would likely be echoed by the other banks over the coming months.
“The CBA result is pretty consistent with the economy turning around and the bad debt situation starting to improve, so I think the other banks will be experiencing something similar,” he said.
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