Commonwealth Bank of Australia Ltd (CBA) chief executive Ralph Norris pay package increased by six per cent last financial year even though the bank reported a slight decline in net profit and cut dividends.

However, Mr Norris, his executive team and the directors of the bank will have their salary and fees cut this financial year, in a move CBA announced in April, in light of the global financial crisis.

CBA on Wednesday said Mr Norris’s pay package rose by six per cent to $9.21 million in 2008/09 as his long-term share-based payments were increased.

Mr Norris’ fixed cash salary rose four per cent to $3.25 million, from $3.12 million in the previous financial year, the Sydney-based bank said in its annual report.

Mr Norris’s long-term performance rights, which do not vest for several years, were increased by 51 per cent to $1.94 million.

But Australia’s biggest lender cut Mr Norris’s short-term bonuses, with the cash portion declining nine per cent to $1.73 million and the shares portion also falling nine per cent, to $866,667.

In April this year CBA said bank employees earning more than $100,000 would have their salaries frozen, while employees earning less would receive a 1.5 per cent pay rise.

CBA chairman John Schubert reiterated in the report that overall credit growth in Australia was expected to slow in 2010 and economic conditions would remain challenging for the bank and its customers.

“Accordingly the group will retain its conservative business settings maintaining appropriate levels of capital, liquidity and provisioning,” Mr Schubert said.

“The group will also continue with its cautious approach to the management of credit and market risk.”

Dr Schubert, who will step down as chairman in February next year, said that the Australian economy had been more resilient than expected and it was pleasing to see the beginnings of a recovery.

CBA reported last month that net profit for 2008/09 fell one per cent to $4.723 billion leading it to cut its annual dividend payout.

“I am pleased with the financial performance of the group in what has been a challenging period,” Mr Norris said in the annual report on Wednesday.

“The 2010 year will present challenges as well as opportunities for the group and its customers, and the outlook is by no means clear.

“In this environment the group remains cautious.”

CBA increased Dr Schubert’s annual remuneration by 6.6 per cent to $790,491.

Non-executive director David Turner will replace Dr Schubert as chairman next year.

Shares in CBA declined 29 cents, or 0.6 per cent, to $46.54 by 1404 AEST. The stock reached an 18-month high $47.53 on August 13.

AAP