Commonwealth Bank of Australia has today released its trading update for the March quarter 2019 together with its 31 March 2019 Basel III Pillar 3 Capital Adequacy and Risk Disclosures.
Sound business fundamentals and momentum maintained in a challenging operating environment. Additional customer remediation provisions of $714m.
“We are 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.
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.” – Chief Executive Officer, Matt Comyn.
Summary
- Sustained volume growth in our core franchise, with home loan growth in line with system and continued growth in household deposits and business lending (BPB).
- Capital and balance sheet strength maintained, with the Common Equity Tier 1 (capital) ratio of 10.3%, up 30bpts excluding the impact of the 2019 interim dividend.
- Headline profit impacted by $714m in pre-tax additional customer remediation provisions ($500m post tax). Unaudited statutory net profit was approximately $1.75bn2,3 in the quarter, with cash net profit from continuing operations approximately $1.70bn2,4. Excluding notable items, cash net profit decreased 9%.
- Operating income 4% lower, reflecting a combination of seasonal impacts, temporary headwinds (incl. unfavourable derivative valuation adjustment and weather events) and rebased fee income driven by the Bank’s Better Customer Outcomes program.
- Operating expenses increased 1% excluding notable items, or 24% including additional customer remediation provisions/notable items. Refer to page 3 for an update on the Bank’s customer remediation program.
- Loan Impairment Expense (LIE) was $314 million in the quarter, equating to 17bpts of GLAA5. Some pockets of stress remain apparent, with higher levels of consumer arrears and corporate troublesome and impaired assets in the quarter.
