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.
CBA shares fell 2.44 per cent in the first 10 minutes of trade to $73.56.