Commonwealth Bank profit down 2.1 per cent to $4.68 billion

Australia’s biggest bank recorded a massive profit less than two days after the royal commission’s final report was handed down.

Commonwealth Bank has recorded a 2.1 per cent dip in its first-half cash profit to $4.68 billion, blaming risks and compliance investing related to the royal commission and the slowing property market.

Some analysts expected a higher profit for the nation’s largest bank, but it was 1.7 per cent higher for the six months to December 31 with discontinued operations such as the local insurance businesses it sold to AIA removed.

Commonwealth Bank of Australia CEO Matt Comyn says he has a lot of work to do to regain customer trust.

The result comes after Commissioner Kenneth Hayne QC handed down his final report into the sector on Monday afternoon.

Commonwealth Bank chief executive Matt Comyn said the bank had a lot of work to do to regain the trust of its customers.

“There is much work ahead as we understand the implications and implement the recommendations of the royal commission,” he said.

“We are already making the necessary changes and will be a better bank as a result.”

The bank’s risk, compliance and remediation costs jumped to $221 million from $100 million a year earlier, although total expenses dropped 3.1 per cent due to the AUSTRAC money-laundering penalty and other costs.

The profit growth was offset by a lower net interest margin due to the increased cost of funding loans, competition, and customers switching from higher-margin investor and interest-only mortgages to cheaper owner-occupier and principal and interest loans.

Commonwealth Bank says customers have been switching institutions as banks tighten lending standards and raise the cost of riskier loans in response to regulatory intervention and the financial services royal commission.

“The housing market transition is a rational outcome of the lending policy changes introduced over a number of years, especially following an extended period of outpaced growth in some markets,” Mr Comyn said.

Banking stocks jumped on Tuesday despite the royal commission’s final report being spruiked as a scathing indictment of the industry, lifting the Aussie share market to its biggest day in 26 months.

Commonwealth Bank itself soared 4.7 per cent to close the day at $73.60.

CBA’S FIRST HALF

* Cash profit down 2.1pct to $4.676b

* Net profit down 6.3pct to $4.599b

* Total income down 1.9pct to $12.411b

* Interim dividend flat at $2.00, fully franked

With AAP

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Originally published as Commonwealth Bank profit down 2.1 per cent to $4.68 billion