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CBA extends Indonesian franchise

06 July 2011 4:29PM
Commonwealth Bank will continue to invest in its business in Indonesia, a subsidiary that earns little profit for the bank.Ralph Norris, chief executive of Commonwealth Bank, told a business lunch in Brisbane yesterday that at present the bank has 84 branches in Indonesia and is "aiming to have 150 over the next year or two".CBA has been steadily building up branch numbers over recent years and the investment is reflected in the negligible earnings of its only wholly controlled foreign banking operation in Asia.PT Bank Commonwealth earned a net profit of 7.8 million rupiah in the year to December 2010. The return on assets was 0.02 per cent, while the return on equity was 0.2 per cent.The costs of supporting growth in Indonesia are low.Over 2009 and 2010, CBA contributed 300 billion rupiah to increase the bank's capital base by a third, an amount equal to around A$30 million.The bank has extended its lending products to cater to small business, according to the 2010 annual report. It also reports that sales of wealth management insurance products are rising.

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