Finance Finance News Commonwealth Bank profit dragged down by laundering scandal

Commonwealth Bank profit dragged down by laundering scandal

Commonwealth Bank
The Commonwealth Bank half year profit has factored in penalties expected from the money-laundering scandal. Photo: AAP
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The money laundering scandal and costs associated with the bank Royal Commission have scythed $575 million off Commonwealth Bank’s first half profit.

The bank reported a first half profit of $4.9 billion, an increase of 1.2 per cent on the previous corresponding period.

Its cash profit — the measure preferred by the banks and studied by the market — came in at $4.73 billion.

That was down almost 2 per cent on last year and well short of expectations of a record result in excess of $5 billion.

The result was dragged down by a charge of $375 million the bank said it had set aside for an expected penalty relating to alleged contraventions of Anti-Money Laundering and Counter Terrorism laws and $200 million set aside for costs to be incurred in the Royal Commission.

‘Reliable estimate’ of legal costs

CBA chief executive Ian Narev offered a degree of contrition in announcing the results.

“During this period [the six months to December 31], we have focused a great deal of effort on fixing our mistakes, and becoming a better bank,” Mr Narev said.

“We have taken a significant provision for regulatory and compliance costs, consistent with accounting standards.

“We have also taken a $375 million expense provision which we believe to be a reliable estimate of the civil penalty a court may impose in the AUSTRAC proceedings.

“We recognise, and regret, that these costs arise from our failure to meet some standards that we should have.”