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Asian investments opaque, but growing

11 August 2011 4:35PM
"One area of investment that doesn't get a lot of exposure," CBA's chief executive, Ralph Norris, half-complained at yesterday's investor briefing, "is that of Asia, where we have been pursuing a considered, prudent and focused growth strategy over many years."One brake on the exposure is CBA's lack of disclosure and the lack of consistency in what it does disclose - two habits continued in yesterday's annual profit presentation.There were two chief, and brief, packets of data on the bank's Asian endeavours.The commentary in the financial statements states that the cash net profit for the activities grouped under the banner of "International Financial Services Asia" for the year to June 2011 was A$53 million, a rise of 18 per cent over 2010.After adjusting for foreign exchange movements, cash net profit increased 36 per cent, the bank said.Most of this profit arises from the bank's proprietary activities in Indonesia, as well as minority investments in banks in China and Vietnam.Most of CBA's profits in Asia are attributed to other business not grouped under IFS Asia, such as its long-standing wealth management activities in Hong Kong.According to the slide-pack for the annual profit, the cash net profit from the bank's entire Asian activities in 2011 was actually A$231 million, up from $212 million in 2010.Norris said, "We remain confident that in the fullness of time the contribution to group will grow to be much more meaningful."One means to that goal is more acquisitions.David Craig, the bank's chief financial officer, said, in respect of Asia, that "the organisation will be making sure that it's not just going to rely upon its existing revenue streams; it will be looking for other revenue streams."I think we all have to be careful that when we hear the words transformational or strategic, proceeding the word position that usually means that an organisation is going to spend too much.  "My view is that the best sorts of acquisitions [are] undertaken opportunistically and I feel that Bankwest was a classic example of that."The sort of volatility that we've seen in recent weeks, that tends to present opportunities that are well capitalised; large organisations that give us the opportunity move."So we do a lot of work inside this organisation looking at a large range of organisations and businesses, so we are always well-prepared, if something was to shake loose, to be able to move, because we, generally, would have found that we've done the work on it."

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