UPDATE 1-Commonwealth Bank in record profit, H2 results beat forecasts
* A$4.04 bln 2H cash profit vs A$3.84 bln consensus
* H2 dividend at A$2 a share, annual dividend up 9 pct
By Jackie Range
SYDNEY, Aug 14 (Reuters) - Commonwealth Bank of Australia , the nation's biggest lender by market value, logged a forecast-beating 10 percent climb in annual cash profit to an all-time high, its fourth year of record profits, and boosted its full year dividend by nine percent.
The country's biggest mortgage lender has drawn strength from a steady flow of plain vanilla retail deposits.
Full year cash profit rose to A$7.82 billion ($7.11 billion), with second-half cash earnings coming in at A$4.04 billion, up 14.1 percent from a year earlier and above a consensus forecast of A$3.84 billion from five analysts.
Cash profit excludes one-off and non-cash accounting items and is closely watched by investors.
Net interest margin, the difference between interest earned and paid was 2.13, up from with 2.09 percent last year. The bank declared a second-half dividend of A$2, taking its total dividend for the year to A$3.64.
Australia's four biggest banks face challenges, however, in sustaining earnings growth at a time when economic growth is slowing and interest rates are low. CBA has already trimmed operating costs and analysts say there is not that much room for more gains to be earned that way.
Government-backed growth in pension funds is also set to drain the money pool available for old-fashioned retail deposits, putting the traditional business model that made Australia's banks among the most profitable in the world in jeopardy.
Like rivals National Australia Bank Ltd, Australia and New Zealand Banking Group Ltd and Westpac Banking Corp, CBA's shares have been driven up by yield-hungry investors switching out of mining stocks as the resources boom tapers.
In the last 12 months, CBA's stock has risen 19.8 percent, compared with a 10.9 percent climb for the broader market .
It was the first of Australia's main banks to report full year earnings.
Tier one capital, a measure of the bank's ability to absorb unexpected losses, was at 11 percent, up from 9.8 percent a year ago. ($1 = 1.1002 Australian dollars) (Reporting by Jackie Range; Editing by Edwina Gibbs)
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