Australia’s largest bank has announced that it is coughing $918 million in customer remediation, with another $358 million set aside for risk and compliance programs. This brings the total losses following the royal commission to just over $1.2 billion.
Despite the high costs headed its way, the bank’s CEO, Matt Comyn, appears positive about the bank’s position.
“The key takeaways from my perspective are we’re making very good progress on becoming a simpler and better bank,” he said.
The lower financial result was a direct result of fines implemented by commissioner Kenneth Hayne’s royal commission, the CEO did concede, and noted the 4.7 per cent drop in profit.
“So, that cash net profit after tax is, of course, subdued, and it’s been impacted by higher remediation costs of almost $1 billion during the course of the year, as well as elevated risk and compliance spend,” Mr Comyn continued.
The market reaction
Following the announcement, the share price for CBA fell by 2 per cent and reached a low point of $77.81 per share.
The position wasn’t helped by Tuesday’s mass sell-off of Australian equities due to trade tensions between the United States and China, when the bank fell from a high of $81.24 per share to $79.41 per share.
Full year 2019 highlights for shareholders
- Core business continued to perform well – underpinned by growth in home lending, business lending and deposits.
- Cash net profit after tax from continuing operations of $8.492 billion (-4.7 per cent).
- Final dividend of $4.31 per share for investors, fully franked.
Cameron Micallef is a journalist at Nest Egg, writing primarily about personal wealth and economic markets.
Prior to this, Cameron worked for Australian Associated Press. He graduated from the University of Wollongong with a double degree in communications and commerce.