Commonwealth Bank probe fallout sullies $9.9bn profit
COMMONWEALTH Bank chief Ian Narev has acknowledged he and his executive team could lose millions of dollars more in bonuses as the fallout from bank’s money-laundering scandal grows.
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COMMONWEALTH Bank chief Ian Narev has acknowledged he and his executive team could lose millions of dollars more in bonuses as the fallout from bank’s money-laundering scandal grows.
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Speaking as the group unveiled a record net profit on Wednesday, Mr Narev said there was “nowhere to hide” as the CBA board responded to the allegations buffeting the bank.
Catherine Livingstone, who chairs the board, announced earlier this week that short-term bonuses for Mr Narev and 11 other senior executives would be axed this year.
Those bonuses were potentially worth about $16 million.
Mr Narev is expected to lose about $2.8 million from a total estimated pay and perks package of about $8.7 million.
Following claims from regulators the bank failed in its obligations to help prevent money laundering, some institutional investors have also said long-term bonuses should be in the gun.
Ms Livingstone had warned there may be more pay cuts, Mr Narev told Business Daily yesterday. “There is every option on the table,” he said. It will be disclosed very clearly — there is nowhere to hide.”
The board has created a subcommittee to deal with allegations the bank failed to report suspect transactions.
Last year, Mr Narev was allocated $3 million worth of long-term reward rights, while the rest of his team were allocated about $8.5 million.
The anti-money-laundering authority, Austrac, last week launched a civil action in the Federal Court, accusing the bank of “serious and systemic” legal breaches involving more than 50,000 transactions.
The CBA on Wednesday unveiled a full-year net profit of $9.93 billion for the year to June — up 7.6 per cent on the previous financial year.
The bank’s cash profit, a closely watched industry measurement of underlying earnings, beat market expectations, up 4.6 per cent to $9.88 billion.
It is the eighth consecutive year the CBA has posted a record cash profit and comes as it maintains its mantle as Australia’s biggest mortgage lender.
The bank wrote 330,000 new home loans over the year — 78,000 of these in Victoria — fattening its mortgage book by $102 billion to $486 billion.
The group warned strong competition and higher funding costs had “more than offset” efforts to bolster profitability by lifting interest rates out of cycle with the Reserve Bank. It suffered a decline of 0.03 percentage points in its net interest margin — broadly the profit margin on its lending — to 2.11 per cent.
Deposits grew $43 billion to $561 billion, accounting for 67 per cent of total funding at the end of June, compared with 54 per cent a year earlier.
UBS analyst Jon Mott said the result was “slightly ahead of expectations with very few surprises, likely just as CBA would like it”.
The bank revealed it was in discussions to offload its troubled life insurance business CommInsure, and had agreed to buy the remaining 20 per cent of Aussie Home Loans from founder John Symond.
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