Announcing a full-year profit of $4.79 billion, Commonwealth Bank of Australia will not get too much sympathy from borrowers.
The bank has increased fees and charges for home borrowers, claiming it necessary to offset higher funding costs. The record profits show the strategy has worked well for the banks bottom line. These profits are up 7 per cent from 2007.
It is also paying a lower overall rate of tax than other major banks, with its effective rate coming in at 24.3 per cent in 2008 compared with 28.3 per cent in 2007.
Chief Executive Ralph Norris said the dramatic drop in the effective tax rate was due to one-off factors.
"We are very conservative in our provisioning for tax and we had two tax rulings which went our way during the year," he said.
"We expect our average tax rate to revert to around 28 per cent in future years."
Despite the one-off tax benefits, Mr Norris described the result as solid.
"I am pleased with the financial performance of the group in the 2008 financial year - it has been a solid performance in what has been a challenging year for the global banking industry," he said.
"While not up to the profit levels achieved in previous years, I am pleased to say this result recognises the balance we have achieved between the needs of our customers and our shareholders."
Home loans increased by 12 per cent for the bank in the 12 months to the end of June, but the fees charged to home borrowers increased at a faster rate. Mr Norris was forced to defend the banks home loan fees and argued that the bank was not taking advantage of their customers. He suggested that more borrowers were taking out packaged loans where a lower interest rate is balanced with higher fees.
Mr Norris defended the bank against claims that it was slugging home borrowers on fees to make up for revenue lost due to higher funding costs.
He said the rise in mortgage fees collected was due to the increase in the number of borrowers moving to so-called packaged loans.
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