Profit slide caps turbulent year for Commonwealth Bank

Profit slide caps turbulent year for Commonwealth Bank

SYDNEY: Australia's biggest bank, the Commonwealth, posted a slide in annual profits on Wednesday (Aug 8), capping a tumultuous year for a troubled lender which has been rocked by scandals and board upheaval.

The country's largest firm by market capitalisation reported Aus$9.37 billion (US$6.95 billion) in statutory net profit from continuing operations for the year to Jun 30, a four per cent drop.

Cash profits, its preferred earnings measure, also fell, down 4.8 per cent to Aus$9.23 billion from the previous year and below market expectations.

The decline was mostly driven by a Aus$700 million penalty paid to financial intelligence agency AUSTRAC after it breached anti-money laundering laws, along with compliance and regulatory costs.

"Despite the challenges we have faced this year, the fundamentals of our business remained strong," said chief executive Matt Comyn in handing down his first annual results for the bank.

"We also continued to strengthen our balance sheet. This performance has supported a higher dividend for shareholders."

The bank, viewed as a bellweather for the industry due to its size, announced a final dividend of Aus$2.31, pushing its full-year shareholder payout to Aus$4.31 per share, up two cents on the previous year.

It has been a turbulent 12 months for the country's biggest mortgage provider, which saw former chief executive Ian Narev quit amid pressure from regulators over breaches of laws on money laundering.

He was replaced by Comyn, who has since been on a drive to turn around the bank's battered reputation.

In June, it agreed to pay a Aus$700 million fine - the largest civil penalty in Australian corporate history - to settle the laundering claims.

It followed mediation between CBA and AUSTRAC, which had accused it of "serious and systemic non-compliance" of anti-money laundering laws more than 53,000 times.

In the aftermath, the Commonwealth also replaced its senior leadership overseeing financial crimes and pumped millions of dollars into improving its systems.

All of Australia's banks - among the developed world's wealthiest - have been under increasing scrutiny amid allegations of suspect financial advice, life insurance and mortgage fraud and the rigging of benchmark interest rates

The scandals led the government this year to launch a royal commission into misconduct in the finance industry, which is ongoing.

Over the year, CBA foreshadowed plans to spin off its wealth management and mortgage-broking arms as it tries to streamline operations and focus on core businesses.

It also announced the sale of its Australian and New Zealand life insurance business to AIA for Aus$3.8 billion (US$3.0 billion), and has said it was exploring the potential sale of its CommInsure general insurance arms.

Source: AFP/de

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