After the big four banks suffered a combined 7 per cent fall in profits over FY19, CBA has managed to post a $2.26 billion profit for the first quarter of the new financial year, up 5 per cent.
The August sale of CFSGAM to Mitsubishi for $4.2 billion helped the bank add $1.5 billion to its bottom line over the three months to 30 September.
While the major bank remains challenged by record-low rates and the fallout of the Hayne royal commission, it was able to lift non-interest income by 7 per cent over the period from timing differences and one-off items including a favourable movement in the derivative valuation adjustment (DVA), asset sales in Structured Asset Finance (SAF), higher insurance income from fewer weather events/claims and higher global markets sales.
“These were partly offset by lower funds management income and the ongoing impact of the bank’s better customer outcomes program, which continues to deliver customer savings equivalent to annualised income forgone of [$415 million],” the bank said.
CBA chief executive Matt Comyn said the bank remains well placed in a challenging operating environment, characterised by global macro-economic uncertainty and historically low interest rates.
“Our strong capital position and balance sheet settings mean we are well placed to meet the needs of our customers, illustrated by good volume growth in our core markets of home lending, business lending and household deposits,” he said.
“In a low interest rate environment we will continue to maintain a disciplined approach that delivers balanced outcomes for all our stakeholders, including over six million savings customers, 1.6 million home loan customers and 800,000 retail shareholders, including many retirees, who rely on our dividend.”
CBA has set aside $2.2 billion for its remediation program; $1.2 billion relates to customer refunds of which approximately $600 million has been paid to banking and wealth management customers’ to-date (ex aligned advice).
“Salaried adviser ongoing service remediation is now complete and represented a refund rate of 22 per cent (ex interest),” the bank said.
“Aligned advice remediation work relating to ongoing service fees charged between FY09 and FY18 is continuing. The aligned advice remediation provision recognised in FY19 of $534 million included program costs of $160 million, $251 million in customer refunds and $123 million in interest. This assumed a refund rate of 24 per cent (ex interest) and 36 per cent (incl. interest).”
