A major bank has revealed an 8.1% drop in profit over fiscal year 2019 in its full year results released this morning.
Commonwealth Bank’s (CBA) FY19 net profit was $8.6bn as compared to $9.4bn the year preceding.
CEO Matt Comyn partially attributed the “subdued” result to higher remediation costs totalling $2.2bn in FY19, up $1bn from the year before.
He said, “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.”
“Our home lending balances are up 4%, which is above the system. Our business lending is also up 4% and we’ve continued to see strong transaction deposit growth of 9% for the year.”
Owner-occupied loans made up 71% of new lending in FY19.
Comyn also provided an update on the implementation of the recommendations from the royal commission.
“We’ve already completed six of the recommendations and we’re going to make sure we complete at least another eight before the end of the calendar year, taking the total to 14 of the 23 that we can implement by ourselves,” he said.
“Specifically in the result, we call out $275m of revenue that’s been forgone by deliberate choices that we’ve made to make sure we’re delivering better outcomes for our customers.”
The bank also gave an update on the suspended demerger of its wealth management and mortgage broking businesses, communicating it intends to cease providing licensee services through Financial Wisdom by June 2020 at which point it will proceed with an assisted closure.
When first announced, the demerged business – CFS Group – was to include CBA’s Colonial First State, Colonial First State Global Asset Management (CFSGAM), Count Financial, Financial Wisdom and Aussie Home Loans businesses.
In the subsequent months, CFSGAM and Count Financial have both been sold or are currently in the process of being sold separately.
In today's release, CBA reiterated that it’s “committed to the orderly exit of its remaining wealth management and mortgage broking businesses,” comprising Colonial First State, Aussie Home Loans and CBA’s 16% stake in Mortgage Choice.