Commonwealth Bank of Australia (CBA) has reported its first fall in annual net profit in nine years following a string of scandals that has seen its executives take AU$100 million in pay cuts.
Australia’s biggest lender, which last year sold its life insurance arm, reported a 6% decline in net profits to AU$9.32 billion in its annual report this week.
The profit slide comes after the bank agreed to pay a AU$700 million fine – the biggest in Australian corporate history – for breaches of anti-money laundering and counter-terrorism financing laws that resulted in millions of dollars flowing through to drug importers.
The last time the bank posted a fall in net profit was in the year to June 2009, according to Thomson Reuters.
Commonwealth’s chief executive Matt Comyn, who replaced his predecessor Ian Narev this year amid the bank’s turmoil, said that it was “certainly good to put the last financial year behind us.”
“That enables us to really focus on the future,” Comyn told analysts. “While there will be subdued credit growth, particularly versus the last five years, long term we remain very optimistic about the economic prospects of Australia.”
Full-year cash profit from continuing operations, which excludes one-offs and non-cash accounting items, fell 4.8% to A$9.23 billion – put down to higher funding costs and regulatory charges related to an ongoing inquiry into financial-sector misconduct.
The cash profit does not include the performance of the life insurance unit CBA sold to AIA Group Ltd in 2017 and its loss-making digital banking unit in South Africa, which the bank said was being sold for an undisclosed sum, Reuters reports.
“The result wasn’t good, and the outlook is not good either. Expectations for FY19 are pretty low,” Omkar Joshi, a Sydney-based portfolio manager at Regal Funds Management, said in the report.
“But a lot of people were positioned for a very bad result and to be honest, it just wasn’t that bad.”
