SYDNEY: The head of the Commonwealth Bank of Australia warned on Wednesday that uncertainty over the country’s leadership and policies was hurting business confidence, offering unusually sharp criticism of the government from a business leader.
Prime Minister Tony Abbott this week survived a challenge to his leadership from members of his ruling Liberal Party after weeks of infighting.
The rebuke from CBA Chief Executive Ian Narev came even as the nation’s top lender posted its best first half profit ever and looked on track for a sixth straight year of record earnings.
But a recent crash in commodities prices, weak business credit growth and higher unemployment have renewed concerns about Australia’s economy, while an interest rate cut this month has fanned worries about the potential for a bubble in the housing market.
“The political position in Canberra for some time now has not been conducive to stable policy making on infrastructure, on competitiveness, on foreign investments, on trade,” CBA Chief Executive Ian Narev told a news conference.
“The overall levels of business confidence don’t look strong and we all need to be concerned if they remain weak for a long period of time,” he said.
CBA, Australia’s largest bank by market value, posted an 8 percent rise in cash profit to A$4.6 billion ($3.6 billion) for the six months to end December, helped by higher mortgage lending and lower provisions for bad debt. That was slightly ahead of analysts’ forecasts.
Net interest margin, a key gauge of profitability for banks, fell 2 basis points to 2.12 percent.
Narev said that while there were no signs yet of a housing market bubble, the bank was watching carefully in case one developed. Mortgage and other consumer loans generate 35 percent to 40 percent of earnings for most Australian banks.
His remarks were more cautious in tone than those from Stock land Corp Ltd, Australia’s biggest residential property developer. Chief Executive Mark Steinert told Reuters he saw “an elongated cycle” of property price rises.
The bank’s shares slipped 0.8 percent to a$91.86 but remain near a record high set last week. They have climbed nearly a quarter in value in the past year.
Rivals Westpac Banking Corp, ANZ Banking Group is due to report first-quarter earnings later this month. National Australia Bank this month posted a 6 percent gain in first-quarter cash profit.
($1 = 1.2873 Australian dollars)