CBA delivers a flat first-half result following scandals

CBA has delivered a $4.8 billion half-year profit, despite the financial giant being plagued with scandals that have seen it become the subject of a royal commission, and forced to pay millions in ASIC fines and customer refunds.

CBA’s statutory profit was at $4.9 billion as at December 2017, a relatively flat 1.2 per cent increase over the half year ending December 2016. Cash profit was $4.7bn after tax, a 1.9 per cent decrease on the same period last year, and slightly less than the $5bn profit expected. This was due, in part, to the $375m set aside by the CBA to pay the civil penalty it expects to receive from Austrac due to alleged contraventions of the Anti-Money Laundering and Counter-Terrorism Financing Act.

For the first time, CBA included reporting on its Net Promoter Score (NPS), which sits at 4.4, the highest of the major banks despite the ongoing issues facing the banking giant. For CBA outgoing CEO, Ian Narev, however, this isn’t good enough.

CBA recently confirmed Matt Comyn as its new CEO, replacing Narev in April.

“We have been maintaining the focus on the long-term strategy of how the customer is feeling. On all of the key dimensions we are first or first equal on customer satisfaction measures,” Narev said. “This is the first period we’ve used the NPS, and the rationale behind this was to recognise that we did need to focus more on the root cause of customer dissatisfaction, and the NPS enables that.

“The score is the most positive of the major banks. However, 4.4 is not a good enough number and I’m sure the team will focus on driving that higher in the future. It needs to be higher, particularly in a world where people are judging their experiences by other new players in the industry." 

CBA also set aside another $200m expense provision for costs relating to the regulatory, compliance and remediation programs.

“It’s been a six months characterised by a lot of additional activity, particularly in the world of regulation and compliance, and I want to acknowledge we did bring a lot of that on ourselves. We did so by not reaching standards that others expect of us and we expect of ourselves. That caused reputational damage and there was a financial impact in this result. We are doing a lot of work to fix it,” Narev said.

Narev went on to explain customer outcomes continue to be at the core of CBA’s business in its first half and said the bank had done a lot in this period to focus on better outcomes for customers. Examples he pointed to included leading the industry in cutting ATM fees, making sure tellers are rewarded on service and less on sales, and keeping call centres onshore.

"This is not because we’re favouring customer service over productivity, it’s because we think the two things go together,” he said.

Narev also highlighted the CBA’s recent investment in research and development of technology for customer outcomes. These included the CEBA Chatbox, and the first commercialised blockchain solution in South Africa, which he said will enable the group to give customers their own digital identity for use on the blockchain so they’re in control of it.

"In coming months, the leading in-branch kiosk technology we’ve developed in South Africa will be rolled out in all of the branches and ASB,” he added.

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