CBA pours $575m into shame kitty

THE Commonwealth Bank has posted a first-half profit short of market expectations after tipping $575 million into a kitty to cover costs from its damaging run of scandals.

Unveiling his last results as chief executive yesterday, Ian Narev said he was “cognisant” the bank’s legions of shareholders were concerned about the mounting damage bill.

The bank, which has about 800,000 individual shareholders, has set aside $375 million for penalties that could flow from allegations it breached anti-money-laundering and terrorism-funding laws.

It has also made a $200 million provision for what it says are “currently known” regulatory, compliance and remediation costs.

These include potential costs that could arise as a result of the royal commission — which starts next week — into misconduct into the financial services sector.

“When we take provisions like we did today ... we should always stand up and say it isn’t good enough, and it’s not. And we’ve got to put it right,” Mr Narev said.

“But even as we are absorbing these costs we have managed to raise the dividend a little bit.”

Mr Narev, who in April will hand the chief executive reins to CBA retail banking group executive Matt Comyn, was speaking after the CBA posted a net profit of $4.91 billion for the six months to December.

Its cash profit, which is a closely-watched earnings measurement in the banking industry, fell 0.7 per cent to $4.87 billion.

But the bank lifted its interim dividend by 1c, to $2.

The bank said underlying earnings, which exclude items such as the $575 million in provisions, rose 5.8 per cent to $5.11 billion.

That narrowly missing market expectations for a $5.2 billion result.

Shares in the CBA closed down 0.8 per cent.