Incoming CBA chief executive Matt Comyn will face a raft of challenges when he begins his new role on 9 April, not limited to the royal commission and the AUSTRAC court case, says UBS.
Matt Comyn's internal promotion to chief executive of CBA came as a surprise to the market, which was expecting an external (or even foreign) replacement for the outgoing Ian Narev.
Instead, CBA announced on Monday morning that career banker Matt Comyn, who started at CBA in 1999 and has run the retail banking division since 2012, had been chosen for the top job.
UBS analyst Jonathan Mott said Mr Comyn is "well regarded by the market" having delivered strong, consistent shareholder returns in his time heading up retail banking.
However, said Mr Mott, the 42-year-old will face many challenges – including delivering cultural change to an executive team that he has helped shape in recent years.
Mr Comyn will also have to carefully address reputational damage, technological distruption, an over-leveraged household sector and a slowing housing market, Mr Mott said.
"Steering CBA though the royal commission, the APRA investigation and ongoing legal proceedings will also be a key determinant of Matt's success," he said.
Mr Mott said it is difficult to estimate the impact of AUSTRAC's anti-money laundering allegations or the banking royal commission.
"We are concerned that CBA may be required to adjust its financial objectives if APRA finds that these are not consistent with risk and compliance outcomes. Further, we believe the royal commission may look into potential mis-selling and responsible lending issues across the sector," he said.
"Both of these have the potential to lead to a material reduction in shareholder returns. We do not believe the market is currently pricing in these potential outcomes."
Looking ahead to CBA's first-half results, which will be delivered to the market on Wednesday, 7 February, UBS is expecting a cash net profit after tax of $5,202 million, basic EPS of $2.99 and a $2.09 dividend.
While UBS believes CBA is a "high quality business" that is "well placed for the current environment", Mr Mott said it would be difficult for the bank to outperform with the shadow of the royal commission and the AUSTRAC allegations hanging over it.
"We believe the market is yet to fully consider the impact of the APRA inquiry, royal commission and slowing housing market on CBA's earnings outlook," he said.
APRA will receive a progress report from the Inquiry Panel into the regulator's investigation of CBA by the end of the month, which will be made public shortly thereafter.