Commbank profit slides five per cent after company fines

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Commonwealth Bank’s fines over regulatory misdemeanours have sliced almost five per cent from its net full-year profit, newly minted chief executive Matt Comyn said yesterday.

And wealth manager AMP, which has also been embroiled in the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry scandal, yesterday reported its half-year result had been sharply carved back by 74 per cent to $115 million.

The more than $300 million plunge in earnings resulted from being forced to compensate AMP customers affected by its fee-for-no-service fiasco.

Meanwhile, Mr Comyn said CommBank’s $9.2 billion result was still impressive, adding that if it hadn’t been for the corporate watchdog penalties, the bank would have produced a profit that was 3.7 per cent better than last year’s bumper $9.9 billion, setting another record two years in a row.

In other words, the cost of CommBank’s misconduct has amounted to about $1billion less in earnings than it would have collected if the authorities and the public had not insisted on action.

Despite this, the bank has managed to reward its shareholders handsomely, flagging that it will pay full-year dividends higher than last year’s pay out – $4.31 a share versus $4.29 last year.

“The headline level is down 4.8 per cent, although there has been a number of one-off items that have impacted the result, including a couple of large penalties that we have resolved,” he said.

“If you strip some of those out, actually the result looks more from an underlying perspective up 3.7 per cent. I think given the context of what we have had to operate in, it really does show the resilience of our core franchise.”

Mr Comyn took over as chief executive from Ian Narev four months ago and has had to weather most of the reputational damage the bank has suffered this year.

Among the hits CommBank has sustained in the past 12 months are the $700 million penalty to the Australian Transaction Reports and Analysis Centre (AUSTRAC) for failing to notify the authority about suspected money laundering activities at its terminals, a settlement with Australian Securities and Investments Commission (ASIC) over the bank bill swap rate matter, and $155 million to deal with costs arising out of the Australian Prudential Regulation Authority (APRA) inquiry and the Banking Royal Commission.

The bank has also pared back its activities to reduce conflicts of interest by flagging the sale of its life insurance business, the demerger of its wealth and mortgage broking operations, and its recently announced exit from South Africa.

After gloating about the result, Mr Comyn seemed to change tact, admitting the bank had not done a “good enough job for our customers”.

“We got some things wrong. We have made mistakes. We absolutely need to make sure we do not make them again. And a big part of my job of course is making sure we are a simpler and better bank for our customers, working closely with any customers who have not had a good experience,” he said.

Since the royal commission hearings, AMP has lost its chairman, chief executive and several directors and executives, and its market value has plunged $4 billion.

Yesterday, AMP acting chief executive Mike Wilkins said: “The events around the royal commission into financial services have challenged our reputation and, while we continue to monitor the impacts, we have taken action to stabilise the business and move forward.

“Headwinds remain for the second half of the year, but our focus is clear. We’ll continue to prioritise our customers, putting their interests first.”

Do you think that the price CommBank has paid for its misdemeanours is fair, given that its shareholders will get higher dividends than they did last year? How genuine do you think that the bosses of CommBank and AMP are when they vow to put customers’ interests first in future?

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Written by Olga Galacho


Total Comments: 36
  1. 0

    I’ll say it again – those guilty of such shenanigans should not be permitted to have the cost of legal defence etc taken off as a tax deduction.

    This is not a cost of doing business – it is a cost of doing crime.

    If it drives them and their shareholders to the wall – that’s life – and it only the same as they’ve handed out to countless innocents in their relentless pursuit of greed and Me First. They’ve had their free ride – now it’s time to pay the piper(s).

    • 0

      Resume all super funds into one consolidated account under the Trebor Scheme, and have only one set of people paid to run the show, with an elected management board… all out of the grasoing, thieving hands of politicians and their cronies.

    • 0

      … and re-regulate the banks…… argument ends.

    • 0

      .. and as for ‘the poor shareholders’ – if they choose to gamble in a speakeasy and it is raided and the cash on the table confiscated – they have nobody to blame but themselves…. roll the dice and take your chances in the Banker’s Casino run by the Banker’s Mafia.

    • 0

      TREBOR….Regulate the banks and utility companies and bring back honest business. Australians used to be rewarded for saving instead of being ripped off.

      Motor vehicles contribute more to global warming than the lights and heaters of Australian householders.

    • 0

      jackie, the banks in Australia are some of the most stringently regulated in the world. It is not more regulation that is needed. Rather more enforcement of those regulations is required.

    • 0

      It is not the Banks that should be fined, but the Top Execs that get paid obscene salaries and were at the wheel at the time.
      Hefty fines for each and in some cases Jail Time.

    • 0

      Jackie, fossil fuels that generate electricity is responsible for most CO2 emissions, followed by agriculture, more so than all the transport put together:

    • 0

      Agree with RK and Trebor – Fines, Jail time for execs, and re-regulate / take over the CBA as they have proved their incompetence & dishonesty in private hands at the expense of customers from whom they continued to extract their large profits.

      Note that the new CBA CEO used to be the Head of their Retail Banking, the area responsible for the “..$700 million penalty to the Australian Transaction Reports and Analysis Centre (AUSTRAC) for failing to notify the authority about suspected money laundering activities at its terminals..” Looks like he got the top job as a reward, with large Bonuses to look forward to!!!

    • 0

      RK got it right. The banks should not be fined. Those who commit the crime should do the time. The shareholders did nothing wrong and shouldn’t be penalised for the misconduct of executives and board members whose criminal acts they knew nothing about.

      Destroying the value of blue chip shares – like killing off franking credits – can only hurt the overall economy and reduce general prosperity, and that flows on to hurt the poorest most. Unless it’s clear that investors are knowingly supporting wrongdoing, they should not suffer.

    • 0

      But you have to feel for the banks a little. After all, they were justifiably confident that the government would do nothing to intervene as they went about their business in their usual, greedy ways.
      They did miscalculate slightly when they forgot that a desperate need to improve the chances of winning the next election would trump the loyalty they had come to expect from a government lead by a former merchant banker, but you can’t win ’em all!
      As for the shareholders, no need to worry, it won’t take the banks long to recoup their losses.

    • 0

      For everyone’s sake, maxchugg, I hope your last sentence is correct. The green-eyed monsters among us don’t seem to get it that hurting the SFRs hurts everyone, because when the SFRs are no longer able to be self-supporting, there is more demand on the pension system and less money to go around. Cuts will always hurt the poorest most. Why do so many have-nots think the solution to all evils is to steal from those who worked hard and saved well? It’s flawed thinking – driven by selfishness and envy. Sadly, selfishness and envy destroy brain cells!

  2. 0

    Doctor and dentist – back later….. being a burden on the healthcare system…. (snuckles under armpit)…

  3. 0

    Doctor and dentist – back later….. being a burden on the healthcare system…. (snuckles under armpit)…

  4. 0

    Great result by CBA
    Kudos to the directors for lifting the dividend payout too
    Share price up more than $2 since the profit announcement
    Hopefully smooth sailing from here on in now that the bank bashing is over

    • 0

      How right you are , Olbaid.
      To all those permanently outraged and jealous, just nick off, shut up and let our world class banks carry on supporting our super, without your Trotskyite/ Getup moaning and groaning and lying.

    • 0

      All right – I’ll bite.

      What a desperate ploy by the Comm to pay a higher share – even when they are accepting full responsibility for wrongdoing by paying out those whom they’ve wronged.

      Looks to me like a desperate play to prop up shareholder confidence so there won’t be a rush to sell stocks and thus a collapse…

      Good work if you can get it – when you can write off any ‘loss’ next year…..

      Now – on the subject of what is wrong with business and the rules that contain and constrain it…. it should be outlawed that any business can recoup via tax deduction any malfeasance for which that business is responsible.

      Simple, eh?

  5. 0

    Cash for comment is alive and well just a name change.

  6. 0

    Trebor check your gold fillings when you leave the chair they will probable end up in the Future fund via the Caymen islands.

  7. 0

    “now is the time to pay the piper”, great line by or “resume all super funds into one tremor scheme” from our in house clown tremor, well tremor/labor mickey, it did not drive their shareholders to the wall instead they increased their divident and thanks to the likes of you it will cost those who need a loan to buy a house a minium increase of ten percent more (20%) to become eligible for the loan, hope you can sleep well when others will worry how to save for a deposit of now a minium 20% instead of ten%, hope to get your answer before 2.30am

  8. 0

    “Headwinds remain for the second half of the year, but our focus is clear. We’ll continue to prioritise our customers, putting their interests first.”

    Continue to prioritise ? Beg pardon, doesn’t that suggest they’ve been doing the right thing by their bunnies. Maybe I’ve missed something. Their “focus” has sure as hell been clear to them up to this point in time – they’ve maxed out skimming, lying, cheating and swindling and paid emselves handsomely to boot. You bet they’ll experience “headwinds” – as a result of having their heads firmly embedded up their immediate superiors’ arse !

    Customers first, crap. The only time him and his rotten toady mates ever considered putting anyone else first were the suckers lining up to deposit funds into their stinkin swamp.
    The bastards can ‘croak’ for all I care.

  9. 0

    In another sphere…… The Music Of The Spheres etc….. we need to ask ourselves a question or two.

    Since nothing in politics happens accidentally… and all is planned…………..

    We need to ask ourselves what the CURRENT government is gaining from this… forget about the Opposition….. forget about the injured people …….

    WHAT exactly is the current government gaining from this?

    They never do anything – Labor or LNP – unless there is a good reason… Neville Wran said it once – you never call a Royal Commission unless you know already the answers.

    So WHY is a government with a majority in the house pursuing what seems, at first glance, to be a direction destructive of its donation base – not its VOTE base… its donation base??

    Qui Bono? Is it that THIS Government (sic) gains kudos for fair play to the ordinary person and those who have suffered – by n arranged ‘meeting’ between themselves and those under scrutiny by this ‘royal commission”?

    Where is the virtue in demolishing AMP as a ‘superannuation provider’?

    Qui Bono?

    What follows therefrom?

    • 0

      Is it that the major banks benefit from a ‘new’ approach – without materially altering one thing….. and, once ‘cleared’ of their wrongdoing – can then simply go on with business as usual?

      Qui Bono???

    • 0

      tremor, did not know you needed a bank loan to live in a caravan supplied by the caravan park

    • 0

      AMP is full of Labor mates. The Greens were all over it, asking for an investigation into the relationship between ASIC and AMP. Labor nepotism again.

    • 0

      And Commbank? NAB? If your bigoted BS explanation has any merit, Adrianus, how do you explain the attack on the entities that are full of LNP supporters?

    • 0

      Grandson, at age 14, explained in great detail how and why governments deliberately drive Depressions at regular intervals and how history evidences that one is needed now to serve the goals of the wealthy, and how the government is deliberately designing policy to cause another Great Depression. Attack on banks and super funds is part of the strategy to destroy the wealth of the middle class and upper working class. Change to assets test was part of that strategy, as is the ending of franking credits. BOTH major parties are colluding to achieve the same goal. It’s unlikely there are many politicians who do not support the strategy.

  10. 0

    Cruelest fact for Shareholders is the then AMP’s CEO knew abt the corruption, sacked a couple of his senior staff…..but all kept a secret ’til recently & he’s also gone now/suppossedly “retired!?”

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