Friday 29 Mar 2024
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(May 9): Commonwealth Bank of Australia on Wednesday posted a 2 percent fall in cash profit from a year ago as it invested in reforms to fix failings in compliance and culture revealed by regulators and an independent inquiry.

Cash earnings, a measure that excludes one-offs and non-cash accounting items, fell to A$2.35 billion ($1.8 billion) for the three months ended March 31 compared with A$2.4 billion reported a year ago, the bank said in a limited trading update.

Underlying operating costs rose on higher regulatory and compliance spending, it said.

The 106-year-old bank, Australia's largest, is under unprecedented scrutiny over misconduct including thousands of breaches of anti-money laundering and terrorist financing rules.

It faces massive potential fines, higher capital requirements and compliance costs stemming from multiple investigations into shortcomings in its culture and governance.

Australia's financial sector has been rocked by near-daily evidence of wrongdoing revealed by a powerful independent inquiry established by the federal government following a series of scandals at CBA and other big banks.

In further bad news for CBA, the bank last week confirmed it had lost the records of almost 20 million accounts but chose not to inform clients.

Troublesome and impaired assets for the quarter fell to A$6.6 billion, compared with A$6.7 billion last year, but rose 10 percent over the previous quarter. Net interest margin "declined slightly", the bank said.

The group’s common equity tier 1 ratio stood at 10.1 percent as at March 31, down from 10.4 percent as at Dec. 31.

Australia's banking regulator slugged CBA with an extra A$1 billion capital requirement last week, to be lifted once governance reforms have taken place.

CBA reports after three of the "Big Four" Australian banks reported first-half results.

Australia and New Zealand Banking Group's profit growth beat estimates, although it flagged slowing revenue growth, while National Australia Bank reported a 16 percent fall in profit impacted by restructuring costs. Westpac Banking Group posted better-than-expected half-year earnings with 6 percent growth. ($1 = 1.3419 Australian dollars)

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