Remediation creeps up amid CBA’s strong outlook

In a statement, CBA said its cash net profit after tax for the first quarter of 2021 was $2.4 billion, up 24 per cent versus the first-quarter average of last year.

The bank said the result had been driven by lower loan impairment expenses, while chief executive Matt Comyn noted home and business loans had also grown dramatically.

“The bank remains well placed to support our customers and the broader community as the economic recovery from COVID-19 continues,” Mr Comyn said.

“Our disciplined focus on operational excellence was reflected in continued strong operational performance in the March quarter. This was highlighted by strong home loan funding volumes, particularly through our proprietary network, and business lending continuing to grow at greater than three times system levels.”

However CBA noted its expenses had risen 2 per cent over the quarter if remediation costs related to “legacy wealth and banking issues” were included.

The bank sold its advice dealer group Count Financial to listed advice firm CountPlus (CUP) in 2019. CUP noted remediation provisions associated with the dealer group had risen from $220 million to $252 million.

“This is within the $300 million limit of the indemnity provided by the CBA to CUP for certain post and pre completion conduct of Count Financial arising from when Count Financial was owned by CBA,” CountPlus said.

“The potential for further increases to the indemnity limit remains under certain triggers relating to the failure rate for free for no service remediation and the quantum of certain inappropriate advice remediation.”