Profit down as Commonwealth Bank pays for industry scandals

Sydney, Aug 7 (AFP/APP):Australia’s Commonwealth Bank, the country’s biggest lender, posted weaker annual profits for the second year running on Wednesday after a tumultuous year of industry scandals.
The bank reported Aus$8.57 billion (US$5.81 billion) in statutory net profit for the financial year ending June 30, down 8.1 percent from the same period last year.

Its prefered earnings measure of cash profits fell 4.7 percent to Aus$8.49 billion.
Australia’s banks — among the world’s wealthiest — are still reeling from a Royal Commission into the industry that exposed rampant malpractice.

The inquiry unearthed a host of scandals, including fees levied against dead people, aggressive selling tactics and poor financial advice.

The country’s biggest banks were forced to spend billions of dollars to reimburse customers.
Commonwealth Bank, Australia’s biggest company by capitalisation, paid out Aus$918 million in customer remediation costs in the financial year, along with an additional $358 million in boosting compliance.

Chief executive Matt Comyn said the bank was “responding to a challenging” environment but was setting itself up for the long-term.

“While this year’s headline results were impacted by customer remediation costs, revenue forgone for the benefit of customers and elevated risk and compliance expenses, our core business continued to perform well — underpinned by growth in home lending, business lending and deposits,” he said.

Commonwealth Bank has this year been trying to refocus its efforts on its central banking business with the sale of its asset management business, as it seeks to become a “simpler” bank.

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