CBA "fixing mistakes" as it prepares for massive cost of money laundering fines

CBA "fixing mistakes" as it prepares for massive cost of money laundering fines
Commonwealth Bank (ASX: CBA) has set aside more than half a billion dollars to cover potential costs from allegations it breached anti-money laundering and terrorism funding laws.

Outgoing CEO Ian Narev, who delivered his final set of results before departing, says the bank has made provision for a $375 million fine along with a further $200 million for "currently known" regulatory, compliance and remediation costs, which include the banking royal commission.

"We have focused a great deal of effort on fixing our mistakes, and becoming a better bank," Narev says.

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

Narev says the $375 million provision for fines was a reliable estimate of the potential civil penalty related to the Australian Transaction Reports and Analysis Centre (AUSTRAC) allegations that CBA breached reporting rules on more than 53,000 potentially suspicious transactions.

Analysts have estimated the final costs could be more than $1 billion.

Narev, who will be replaced in April by Matt Comyn, had his bonuses cut to zero in the wake of the scandal along with other senior executives.

The provisions dragged down CBA's half year results by 1.9 per cent to $4.74 billion, while pro forma underlying cash profit excluding the provision rose 5.8 per cent to $5.11 billion. This narrowly missed analyst expectations of $5.2 billion.

Statutory profit for the six months to December 31 was flat at $4.906 billion, while cash profit, including the life insurance business that CBA has agreed to sell to AIA for $3.8 billion, dropped 0.7 per cent to $4.871 billion.

CBA also says its net interest margin rose 0.06 percentage points over the half year to 2.16 per cent because of a reduction in borrowers taking on interest-only loans.

As APRA limits on high-risk mortgage lending kicks in, CBA also says owner-occupier lending rose 7.5 per cent in the 12 months to December 31, while investor lending slowed to just 0.5 per cent in the same period.


Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.

Business News Australia

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

Four ways businesses can use artificial intelligence to triumph in 2022
Partner Content
The last two years have delivered major disruption to the technology industry and broad...
PROS
Advertisement

Related Stories

Aussie Broadband launches $344m bid for Over The Wire

Aussie Broadband launches $344m bid for Over The Wire

One of Brisbane’s Top Companies Over The Wire (ASX: OTW) has ...

Afterpay postpones vote on takeover as Square takes on a new name

Afterpay postpones vote on takeover as Square takes on a new name

Delays from the Bank of Spain in approving a multi-billion takeover...

Woolworths takes on Wesfarmers in bid for Priceline with $872m offer

Woolworths takes on Wesfarmers in bid for Priceline with $872m offer

Woolworths Group (ASX: WOW) has today thrown its hat in the ring to...

Crown opens up books to Blackstone, but says bid undervalues business

Crown opens up books to Blackstone, but says bid undervalues business

Crown Resorts (ASX: CWN) has today given suitor Blackstone access t...