Advice remediation costs hit CBA
The financial advice worries which have impacted the Commonwealth Bank over the past two years have begun to manifest in its bottom line, with the big banking group noting higher expense growth during the March quarter.
Despite reporting a statutory net profit on an unaudited basis of approximately $2.2 billion for the quarter and strong trading income, the bank also noted that expense growth had been higher, "impacted by growing regulatory, compliance and remediation costs".
It said these costs had been associated with a number of legislative reforms such as Future of Financial and Advice and Stronger Super but added that "provision for the advice review program and ongoing regulatory engagement" had also been a factor.
However the quarterly update provided a positive picture of the bank's Wealth Management division noting that Funds Under Administration and Assets Under Administration had grown by seven per cent and eight per cent respectively, reflecting strong investment performance, net inflows and foreign exchange gains.
The update said that insurance inforce premiums had increased by three per cent over the prior quarter.
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