ZCZC
BCN-28
AUSTRALIA-BANKING-COMMONWEALTH
Profit slide caps turbulent year for Commonwealth Bank
SYDNEY, Aug 8, 2018 (BSS/AFP) – Australia’s biggest bank, the
Commonwealth, posted a slide in annual profits Wednesday, 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 June 30, a four percent drop and its first annual fall since
2009.
Cash profits, its preferred earnings measure, also fell, down 4.8 percent
to Aus$9.23 billion from the previous year and slightly 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.
Chief executive Matt Comyn, handing down his first annual results, admitted
it had been a “difficult” 12 months.
“We got some things wrong. We have made mistakes. We absolutely need to
make sure we do not make them again,” he said, while insisting the bank
remained in good shape.
“Despite the challenges we have faced this year, the fundamentals of our
business remained strong,” he said. “We also continued to strengthen our
balance sheet. This performance has supported a higher dividend for
shareholders.”
The bank, viewed as a bellwether 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.
Morgan Stanley said in a note the result was “satisfactory relative to
expectations”, and its share price was 2.54 percent higher in afternoon trade
at Aus$74.74.
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.
MORE/HR/1055
ZCZC
BCN-29
AUSTRALIA-BANKING-COMMONWEALTH 2 LAST SYDNEY
– ‘Simpler, better’ –
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 the Commonwealth 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 replaced its senior leadership
overseeing financial crimes and pumped millions of dollars into improving its
systems.
The bank also admitted in May its traders engaged in “unconscionable”
behaviour in the setting of a benchmark interest rate, and agreed to pay a
Aus$25 million fine in a case brought against it by the corporate watchdog.
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.
Comyn said the bank was working to simplify its portfolio, operating model
and processes to make the company “simpler, better” moving forward.
“The result will be a more focused business managed with greater discipline
to deliver sustainable returns at lower risk,” he said.
The Commonwealth has been offloading non-core assets, announcing this year
the sale of its Australian and New Zealand life insurance business to AIA for
Aus$3.8 billion.
It has also flagged the potential sale of its CommInsure general insurance
business and foreshadowed the spinning off of its wealth management and
mortgage-broking arms.
On Wednesday it announced plans to sell its loss-making South African
banking business.
BSS/AFP/HR/1055