The Commonwealth Bank of Australia (ASX: CBA) share price shrugged off news today that the bank will take a $169 million non-cash profit hit for the interim half-year profit reporting period ending December 31 2018.
According to the bank the losses comprise of $74 million (post tax) related to costs and losses on disposals of businesses around the sale of its Colonial First State Global Asset Management (CFSGAM) business and its CommInsure Life business.
The second part of the total loss is related to hedging and IFRS (accounting standards) losses of $91 million post tax mainly related to the depreciation of the Australian dollar versus the New Zealand dollar.
Although a non-cash accounting loss of $169 million might seem a lot on first blush, in the context of CBA’s $9,200 million cash profit over FY 2018 investors can see it’s a small amount.
This explains why the CBA share price is higher today, with greater problems for the bank to negotiate including falling Australian house prices and rising costs as a result of The Royal Commission.
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