UPDATE 8.55am: Commonwealth Bank chairman David Turner says the bank expects demand for credit to remain subdued this financial year amid economic uncertainty around the world.
Addressing shareholders at the bank's annual general meeting in Sydney this morning, Mr Turner said it was unlikely there would be any significant improvements in macro economic conditions in the coming year.
There were no signs of a sustained recovery in the United States, and it was difficult to see how Europe could resolve its problems quickly, he said.
While the medium term outlook for the Chinese economy was sound, there was still short-term uncertainty and volatility which would affect the pace of economic growth there.
In Australia, Mr Turner said while he was optimistic about the medium-to-long-term outlook, the local economic climate remained uncertain.
"It's difficult to see the catalyst for alleviating the uncertainty which will continue to affect consumer and corporate confidence," Mr Turner told shareholders.
"So, in the near term, we expect demand for credit to remain subdued and we will retain our conservative business settings."
Mr Turner said the Commonwealth Bank would continue to operate in a disciplined and prudent manner, with a focus on improving its business performance.
He said while retail and wholesale funding costs remained high, the bank was well funded.
It also had strong levels of capital, high levels of liquidity and robust provisioning.
The bank posted a record net profit of $7.1 billion in 2011/12.
Commonwealth Bank's shares were up 39 cents to $57.18 at 8.50am.