Commonwealth Bank Emerges From Probe Turmoil With Steady Profit

(Bloomberg) -- Commonwealth Bank of Australia reported a slight increase in first-half profit as Chief Executive Officer Matt Comyn steadies the ship after the turmoil of a yearlong inquiry into financial industry misconduct.

  • Cash profit from continuing operations rose 1.7 percent to A$4.68 billion ($3.4 billion) in the six months ended Dec. 31, the Sydney-based lender said in a statement Wednesday.

Key Insights

  • Even an out-of-cycle mortgage-rate increase wasn’t enough to absorb higher funding costs, with the bank’s net interest margin falling 4 basis points to 2.10 percent as more borrowers switched from more lucrative interest-only and investor loans
  • Much investor focus will be on how Comyn implements recommendations from the misconduct inquiry. He acknowledged the probe found “too many” examples of poor customer outcomes, and pledged to work with regulators to fix problems
  • The costs associated with the inquiry continue to mount, with risk, compliance and remediation expenses up A$121 million
  • The bank, Australia’s largest mortgage lender, brushed off the property market slump as “a rational outcome” of regulatory lending curbs

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