Commbank looks to the positives and a $9.9b profit

9 August 2017

With barely a nod to its problems with AUSTRAC, the Commonwealth Bank has one again lifted its full-year net profit after tax and increased its dividend to shareholders.

The company reported a 7.6 per cent increase in net profit after tax to $9.928 billion with shareholders being rewarded with a final dividend of $2.30 per share, delivering a full year dividend of $4.29 (fully franked).

But the big news contained in the full-year results announcement to the Australian Securities Exchange (ASX) was confirmation the big banking group was looking to divest its life insurance businesses in Australia and New Zealand.

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The company said it was “in discussions with third parties in relation to their potential interest in our life insurance businesses in Australia and New Zealand.

The announcement said the outcome of the discussions was uncertain and while they might lead to the divestment of the business, the bank would also consider a full range of options.

The company also confirmed it would become the full owner of Aussie Home Loans, confirming that its founder, John Symond, had last week exercised his put option which will require the bank to acquire the remaining 20 per cent interest in Aussie Home Loans (AHL).

The reasons behind the big banking group’s decision with respect to the sale of its insurance business became clear in the division performance sections of its full-year results, with insurance income down 13 per cent on the prior year, with retail life insurance decreasing significantly due to higher claims resulting in loss recognition of $143 million in income protection during the year.

Across the broader wealth management division, the bank said wealth management cash net profit after tax for the full year was down 10 per cent to $553 million, noting that this had been driven by lower insurance income and lower investment experience, partly offset by lower operating expenses.

“Insurance income declined 13 per cent with growth in general insurance offset by a lower income protection result in life insurance,” it said.

Commonwealth Bank chief executive, Ian Narev sought to stress the positives for the bank in the ASX announcement, claiming the bank’s performance this year “has again contributed to the financial wellbeing of our customers, shareholders, our people and the Australian economy. This is the result of our consistent focus on customer satisfaction, innovation and financial strength”.

Continuing the positivity theme, Narev noted that since January 2013, “we have been first or equal first more than 80 per cent of the time in retail customer satisfaction”.

“As at 30 June 2017, we were number one for retail and internet customer satisfaction and equal first for business,” he said. “Given the extent and consistency of our performance, we have decided to set more ambitious targets. Starting this financial year, the net promoter score (NPS) will become the primary metric by which we assess customer satisfaction and our overarching goal is to be number one in NPS for all customer segments.”

 “We believe that alignment around this ambitious goal will drive future performance for customers and shareholders.”


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why didn't their Board disclose the austrac issue to the ASX and market when it knew about it in 2015? Corporate Governance is just a phrase , means nothing.

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