Commonwealth Bank of Australia Ltd (CBA) has lifted its reported profit by seven per cent and says volatility in financial markets is putting pressure on its funding costs.
Net profit for the year ended June 30 rose to $4.791 billion while the bank's preferred measure of profitability, cash earnings, rose five per cent to $4.733 billion.
The cash result was slightly above analysts' expectations.
Australia's biggest bank by value said its impaired loan charge for the full year was $930 million, which was $496 million higher than in the previous year and up from $333 million in the 2007/08 first half.
CBA said the headwinds which the Australian banking industry experienced in the 2008 financial year are expected to dominate the outlook for global banking for some time.
"Uncertainty and volatility in global credit markets will continue to place upward pressure on funding costs," it said in a statement.
Chief executive Ralph Norris said the bank was cautious going into the 2008/09 financial year.
"We are cautious going into the new financial year and the group will continue with its conservative stance until signs of improvements in economic conditions are evident," he said.
"The group's capital position is strong with capital levels well above target ranges."
Mr Norris said the Australian domestic economy remains reasonably resilient.
But credit growth is expected to moderate as the economic slow down impacts its customers.
"While these broad trends are clearly evident, the duration and extent of the slowdown is more difficult to predict," he said.
"There are clearly a number of negatives at work in the Australian economy but it is important that we recognise there are potentially a number of positive influences."
The positives include the huge income boost Australia is getting from rising commodity prices, respectable growth in the economies of our major Asian trading partners, tax cuts and robust business and infrastructure spending.
"The balance of these opposing forces favours continued modest economic growth with credit growth not too far below the average of the past decade," Mr Norris said.
Mr Norris said the bank was well funded, very liquid and in a strong position relative its global banking peers.
He said there were opportunities to grow stronger and that the bank was alert to potential investment opportunities.
"While it is clearly a time to be cautious, the current environment presents well managed banks, like the Commonwealth Bank of Australia, with opportunities to grow even stronger," Mr Norris said.
"Our robust financial position has enabled us to maintain the momentum behind our five strategic priorities and we remain committed to further strengthening our core businesses should attractive, on strategy, investment opportunities arise."
