CBA remediation costs swell over $900m

In its half-year results presentation on Wednesday, Commonwealth Bank said the cumulative cost of its remediation program had now reached around $2.9 billion, up from an estimated $2.7 billion in the second half of the 2020 financial year.

The bank had returned $821 million to customers and had an estimated $933 million left to pay. Of the total $1.75 billion allocated to previous and upcoming customer refunds, $765 million related to its aligned advice channels, $520 million to the bank's direct wealth businesses including Commonwealth Financial Planning and CommInsure, and $469 million to its banking operations.

In relation to fees for no service, CBA said it had refunded 22 per cent of the $500 million received in advice fees by its salaried advisers from 2009 to 2018, and 37 per cent of the $1.18 billion in fees received from aligned advisers between 2009 and 2019, exclusive of interest.

Listed advice group CountPlus, who bought CBA's Count Financial dealer group in 2019, said the bank had increased its remediation provision for the group to $220 million.

Profit crashes 20%

The update came as the bank reported a half-year profit down 20 per cent from the first half of 2020 as it continued to feel impacts from ultra-low interest rates and the COVID pandemic.

CBA reported a statutory net profit after tax of $4.9 billion for the first half of 2021, down 20.8 per cent on the prior corresponding period.

The bank said the result was due mainly to "lower gains realised on the sale of businesses".

Chief executive Matt Comyn said CBA was still delivering "consistently good performance notwithstanding the current environment".

He said the bank was progressing well with its strategy to divest wealth management and improve risk management controls.

"This is an evolutionary change to enable the bank to focus on the new challenges and opportunities ahead," Mr Comyn said.

The bank had seen modest growth of $4 billion in its business lending division over the half, with $13 billion volume growth in home lending and $23 billion in household deposits.

Cash net profits after tax in its retail banking division were $2.2 billion, an improvement from the bank's performance in the second half of FY20 but down on the prior corresponding period's result of $2.3 billion.

In business and private banking, CBA reported a $1.3 billion cash net profit after tax, again an improvement on the second half of FY20's result of $1.1 billion, but down on the $1.4 billion result in the first half of 2020.

Mr Comyn said the bank was "prepared for a range of scenarios" as economic risks from the pandemic remained.