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Commonwealth Bank (ASX: CBA) has put aside $714 million for customer remediation provisions while its bottom line continues to be hammered by the aftershock of the Royal Commission.
Australia's largest listed company announced today the measure would cut its net profit after tax (NPAT) for the third quarter by 28 per cent, even though operating income was down only 4 per cent on the quartely average for the first half.
Just under half of the money put aside was for Aligned Advice remediation issues including those associated with the Royal Commission's 'fees for no service' (FFNS) findings, while just under a quarter was for banking product refunds.
CommBank now estimates total remediation costs to date of $2.17 billion.
Chief executive officer Matt Comyn says the bank is 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," he says.
"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."
In addition, the bank has also foregone an annualised income of around $415 million due to new customer initiatives including fee removals, fee reductions and pre-emptive fee alerts. Of this sum, $275 million will be recognised in FY19.
The announcement follows news earlier this month that Westpac (ASX: WBC) had estimated customer refund, repayments and associated costs of $617 million for the first half, while National Australia Bank (ASX: NAB) put aside $749 million in provisions for the period.
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