Finance Finance News Commonwealth Bank’s profit falls 4 per cent, spends $1.1 billion defending lawsuits

Commonwealth Bank’s profit falls 4 per cent, spends $1.1 billion defending lawsuits

commonwealth bank cba
The bank attributed the much of its drop in profits to bad debts. Photo: AAP
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Commonwealth Bank’s full-year net profit has fallen by 4 per cent to $9.38 billion.

CBA’s result was affected by a $700 million civil penalty it paid to the Australian Transaction Reports and Analysis Centre (AUSTRAC), to settle a money-laundering case brought by the agency last year.

Its profit was also affected by $389 million in “risk and compliance provisions” and “one-off-regulatory costs” — resulting from an ASIC investigation, shareholder class actions, the AUSTRAC proceedings, the royal commission and the APRA inquiry.

In total, the bank spent $1.1 billion defending itself in several lawsuits and hearings.

The underlying cash profit – the bank’s preferred measure which strips out one-off items – was down almost 5 per cent to $9.2 billion, but roughly in line with market expectations.

Costs rose by 9.2 per cent to $11.6 billion, largely due to the AUSTRAC penalty, while income edged up 2.6 per cent to $26 billion.

The bank managed to expand its margins thanks to the higher rates being charged to property investors.

The profit was also supported by another improvement in the quality of its loan book, with loan impairment expenses down 1.5 per cent to $1.08 billion.

-ABC