Bad Loans Hit Commonwealth Bank
Friday, 14 November, 2008
Commonwealth Bank of Australia yesterday said earnings for the six months ending in December would be hit hard by higher-than- expected bad credit loans losses, writes Elizabeth Fry.
The bank's rivals have recently boosted their capital positions. ANZ and Westpac announced underwritten dividend reinvestment plans, while National Australia Bank this week raised A$3bn (US$2bn) in an institutional share placement.
While Commonwealth is in good shape with no systematic credit issues, its exposure to collapsed companies, such as Centro, ABC Learning Centers, Allco and Lehman Brothers, means bad debts are likely to double this year.
The bank has between A$1.6bn and A$2bn of bad debts on its books - similar levels to that of its peers.
Source : http://www.ft.com/