Subscribe to our newsletter

CBA boss struggling with scandals, defends retail channel

CBA boss struggling with scandals, defends retail channel

James Mitchell
— 1 minute read

The significant challenges weighing on Australia’s biggest bank are likely to continue for the next 12 to 18 months, according to a leading market analyst.

In a research report following the release of CBA’s quarterly profit result this week, Morningstar analyst David Ellis noted that the bank has so far incurred almost $2.2 billion in customer remediation and regulatory costs. 

“The diaspora of regulatory, prudential, royal commission and legal issues facing the bank continue to distract senior management from growing the business and increasing shareholder value,” Mr Ellis said. 

Advertisement
Advertisement

“CEO Matt Comyn continues to struggle with a raft of regulatory requirements including royal commission recommendations, APRA’s prudential investigation, ASIC’s enforceable undertakings, strengthening financial crime capabilities, improving risk management capabilities, customer remediation programs, dealing with new government legislation and regulatory requirements.

“We expect these challenging circumstances will remain centre stage for the next 12 to 18 months, particularly with the potential change in government in Canberra. 

CBA shares fell 3 per cent on Monday after the bank announced a 28 per cent decline in cash earnings compared to the previous two quarters. The fall was largely driven by an additional $714 million in pre-tax customer remediation costs. 

Speaking to investors following the release of the group’s third-quarter results on Monday, CBA CEO Matt Comyn rejected reports that the bank was planning to cull 300 of its branches and cut 10,000 jobs in a bid to reduce costs by approximately $2 billion.

“We maintain the largest branch network [and] we believe that it’s an important strategic asset,” he said.

Mr Comyn acknowledged that CBA’s branch network may be subject to closures but claimed that such a reduction would be reflective of the shift in market preferences and denied suggestions that the bank has plans to significantly reduce its physical footprint as part of a cost-saving strategy.

“Clearly, over time, both the number of branches and the size of those branches has reduced and is likely to continue to reduce, but certainty we’re not contemplating any large-scale branch reduction in the near term,” he said.

 

 

CBA boss struggling with scandals, defends retail channel
investordaily image
ID logo

related articles

promoted stories

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.