Australia’s biggest bank announced its full year 2017 financial results on Wednesday, beating analyst expectations of an AUD9.8bn cash profit for the 12 months to June 30. It announced a seven Australian cent increase in the final dividend to AUD2.30 a share, for a full-year payout of AUD4.29.
The CBA also provided an update on its life insurance businesses, confirming it was in talks with third parties interested in buying its operations in Australia and New Zealand.
“CommInsure (Australia) and Sovereign (New Zealand) are strong businesses with scale, expertise, competitive products and access to attractive distribution channels,” CBA wrote in a statement.
However, the bank stressed that the discussions are ongoing and their outcome is uncertain.
“While the discussions may lead to the divestment of those businesses, we will also consider a full range of alternatives, including retaining the businesses, reinsurance arrangements or other strategic options.”
In the meantime, it remains business as usual for the sale of CommInsure products, CBA emphasized.
“Life insurance is a long term product. CommInsure remains focused and committed to delivering quality support and service to our customers.”
In looking to sell CommInsure, CBA is following National Australia Bank and ANZ Bank in cutting its presence in wealth management.
CBA insurance income fell 1% per cent to $786 million in the 12 months to June 30.
Money laundering investigation
The rise in profit comes as the bank was last week hit by claims it breached anti-money laundering laws following allegations that its intelligent deposit machines were used for money laundering activities.
This has triggered a slump in its share price and raised questions about the tenure of chief executive Ian Narev, though the board confirmed it had “full confidence” in the top manager.
Narev said he was unable to go into the specifics of the investigation being carried out by anti-money laundering agency AUSTRAC, but said CBA had fixed the IT issue that led to the alleged breaches and was investigating further.
“We know that we’ve made mistakes,” he said.
Cleared of other allegations
Narev said CBA was “trying to rebuild trust and raise standards”, something the bank has also recently had to do with the CommInsure unit it is now trying to sell.
CommInsure was investigated by the Australian Securities and Investments Commission (ASIC) following allegations that its managers pressured doctors to alter medical opinions so the company could deny customer claims.
While the watchdog said it had not broken the law, it also said that some of its practices, including using outdated medical definitions, were “out of step with community expectations” and could result in poor outcomes for consumers.
CBA shares closed 46 cents, or 0.6 per cent, higher at AUD81.11 on Wednesday.
