Commonwealth Bank pumped $752m into tech during 1H
The Commonwealth Bank of Australia (CBA) has released its financial results for the first half of the 2018 financial year, reporting AU$4.9 billion in after-tax profit on revenue of AU$21.3 billion.
Information technology services expenses were itemised at AU$752 million for the six months to December 31, 2017, AU$350 million less than the technology spend recorded for the first half of FY17.
With 15.9 million customers, the bank counts 6.4 million as "digital" customers, boasting 6.3 million daily logons to either the CommBank app or NetBank platforms. The CommBank app also has 4.8 million unique users, the bank reported, with each logging in at least once during December 2017.
According to CBA, 56 percent of its total transactions by value are digital, likewise 26 percent of retail sales are also digital. Mobile logins also increased by 25 percent in the last 12 months.
In August, civil penalty proceedings were initiated by the Australian Transaction Reports and Analysis Centre (Austrac). It was alleged by Austrac that CBA had been involved in "serious and sys- temic non-compliance" with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
Austrac detailed 53,700 alleged breaches of the Act, which included failing to hand 53,506 threshold transaction reports (TTRs) for cash transactions over AU$10,000 to Austrac through intelligent deposit machines (IDMs) for almost three years between November 2012 and September 2015.
The bank in December admitted that disparate datasets contributed to a contravention of the Act. In its defence, CBA has asked Austrac to treat the contraventions as one course of conduct, arguing that the reports were late due to one systems-related error.
The bank faces a maximum penalty of AU$18 million for each of the contraventions if found guilty; however on Wednesday, the bank noted it has provided for a civil penalty of AU$375 million.
"The group believes this to be a reliable estimate of the level of penalty that a court may impose," the bank wrote in its half-year results. "This takes into account currently available information, including legal advice received by the group in relation to Austrac's claims."
The write-down is included in the bank's H1 profit. "We recognise, and regret, that these costs arise from our failure to meet some standards that we should have. We will continue to work hard to do better," outgoing CEO Ian Narev told shareholders.
AU$200 million in expected costs relating to currently known regulatory, compliance, and remediation program costs, including the financial services Royal Commission that is slated to commence Monday, was also provisioned for in the halfyear balance sheet.
During the six-month period, CBA launched a handful of technology-based initiatives, with the bank touting its mobile-based offerings as making payments and budgeting easier.
Through the CommBank app, customers can activate instant notifications to alert them when and where a purchase has been made. Instant notifications are also available through CommBank when customers have insufficient funds to make a payment.
Where payment methods are concerned, the bank now boasts four card alternatives, including the tap and pay sticker for iPhone users in lieu of an Apple Pay integration; Android Pay; payment using a wearables device such as the Garmin smartwatch and the Fitbit Iconic for New Zealand ASB Bank customers; and Beem.