Commonwealth Bank’s provisioning for customer remediation and responding to the royal commission has passed $2 billion after the lender set aside another $714 million in the third quarter.
The latest provision by Australia’s largest bank included $334 million for issues from aligned wealth advisers including fees for no service and $224 million in other refunds.
That pushed unaudited third-quarter cash profit down to $1.70 billion, 28 per cent down on the average of the previous two periods and also on the $2.35 billion reported in last year’s third-quarter trading update.
“We are committed to improving outcomes for our customers, addressing past failings and compensating customers quickly,” chief executive Matt Comyn said on Monday.
“The additional $714 million 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.”
The $334 million set aside for aligned advice remediation followed $200 million in the first half, with $374 million of the total $534 million going on refunds and interest.
CBA’s in-house refund provisioning hit $834 million after another $72 million for wealth refunds in the third quarter and $152 million for banking.
There was also another $156 million in costs including the implementation of the royal commission recommendations.
“While headline profitability was impacted by higher remediation provisions, our sound business fundamentals ensure we remain well-placed in a challenging environment,” chief executive Matt Comyn said.
Excluding one-off items, profit was down nine per cent on the average of the first and second quarters as expenses rose one per cent, while operating income dropped four per cent.