CommBank remediation bill passes $2 billion mark

CommBank remediation bill passes $2 billion mark

Commonwealth Bank (ASX: CBA) has put aside $714 million for customer remediation provisions while its bottom line continues to be hammered by the aftershock of the Royal Commission.

Australia's largest listed company announced today the measure would cut its net profit after tax (NPAT) for the third quarter by 28 per cent, even though operating income was down only 4 per cent on the quartely average for the first half.

Just under half of the money put aside was for Aligned Advice remediation issues including those associated with the Royal Commission's 'fees for no service' (FFNS) findings, while just under a quarter was for banking product refunds.

CommBank now estimates total remediation costs to date of $2.17 billion.

Chief executive officer Matt Comyn says the bank is committed to improving outcomes for our customers, addressing past failings and compensating customers quickly.

"The additional $714m in pre-tax customer remediation provisions taken in the quarter demonstrates this commitment, and builds on a range of other initiatives to achieve better customer outcomes, including removing and reducing fees for our customers," he says.

"We continue to make progress on our strategy to become a simpler, better bank. While headline profitability was impacted by higher remediation provisions, our sound business fundamentals ensure we remain well-placed in a challenging environment, highlighted in this quarter by volume growth in our core businesses, a strong capital position and continued balance sheet strength."

In addition, the bank has also foregone an annualised income of around $415 million due to new customer initiatives including fee removals, fee reductions and pre-emptive fee alerts. Of this sum, $275 million will be recognised in FY19.

The announcement follows news earlier this month that Westpac (ASX: WBC) had estimated customer refund, repayments and associated costs of $617 million for the first half, while National Australia Bank (ASX: NAB) put aside $749 million in provisions for the 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

A game changer? Aspiring to the new standard on workplace mental health
Partner Content
Work health and safety regulators have been more active in the area of mental health ri...
Aon
Advertisement

Related Stories

WA suspends planned quarantine-free travel bubble with Queensland

WA suspends planned quarantine-free travel bubble with Queensland

The proposed quarantine-free travel bubble between Queensland and W...

Start-ups ready for orbit aboard Space Machines Company’s first mission

Start-ups ready for orbit aboard Space Machines Company’s first mission

The start-up world is clamouring for its place in orbit with Austra...

South Australia’s first Netflix production adds momentum to booming film sector

South Australia’s first Netflix production adds momentum to booming film sector

South Australia has scored its first Netflix production, boosting t...

"Wake-up call" for the Gold Coast as rideshare driver tests positive to COVID-19

"Wake-up call" for the Gold Coast as rideshare driver tests positive to COVID-19

An unvaccinated Gold Coast-based rideshare driver in his 30s is rep...