Commonwealth Bank share price: Q3 profit slides amid hefty remediation costs
Australia’s biggest lender, Commonwealth Bank of Australia (CBA) has reported a lower cash profit for Q3, after the bank was hit by higher customer compensation charges
The charges come in relation to the landmark royal banking commission inquiry, which hit all four of Australia’s big banks with remediation costs.
Commonwealth Bank share price
Commonwealth Bank of Australia shares fell 1.75% at time of writing, responding to the Q3 loss.
The bank’s share price fell to $73.63 at time of writing, falling from $75.48 at previous close.
Commonwealth Bank key figures
Q3 Cash earnings from continuing operations fell to A$1.70 billion, compared to cash earnings of A$2.35 billion a year ago.
CBA said it set aside an extra A$714 million to compensate aggrieved clients during the quarter. Net profit fell about 24% to A$1.75 billion.
The group's common equity tier 1 ratio stood at 10.3%, excluding the 200 cents per share interim dividend.The bank announced in February this year that it would expected a weaker than expected profit due to rising costs and fierce competition.
Banking inquiry remediation costs
CBA and the "Big Four" banks are set to spend millions in compensation charges, while also mending their reputation, after the findings of the enquiry showed that the banks had failed to pay customers what they were owed.
CBA put its demerger of its wealth management and mortgage broking units on hold, in order to focus on refunding customers, mitigating past "issues" and implementing some of the recommendations from the year-long inquiry
Australia and New Zealand Banking (ANZ) bank decided on Friday to cut fixed mortgage rates. CBA has cut the fees it charges customers as part of a series of customer-focused measures to reduce its annualised income by A$415 million.
Leadership changes
Commonwealth Bank of Australia also announced on Monday that Sir David Higgins will retire as its non-executive director on 31 December 2019.
The bank said, Sir David’s decision to retire was “reflective of the time commitment required for the Board.”
Sir David had been a Director of the Bank since September 2014.
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