The Commonwealth Bank of Australia has released an underwhelming quarterly update amid growing expenses associated with the remediation of financial planning clients, regulation and compliance.
In its March quarter trading update, the bank said that for the three months ended 31 March 2015 it saw a growth in spending due to legislative reforms that included FoFA and Stronger Super.
Making provisions for the advice review program and “ongoing regulatory engagement” also meant that expense grew faster than in previous quarters.
These costs and a strong competition for loans saw net profit, which includes one off-items, fall to $2.2 billion in the three months to 31 March from $2.3 billion for the corresponding period a year ago.
Core business lending growth remained at mid-single digit levels (pa).
The bank’s shares were hammered yesterday, plunging 13 per cent to $84.53 in late morning trade.
Despite the increasing costs, the Wealth Management division was a saving grace.
Funds under Management and Assets under Management grew by 7 and 8 per cent respectively for the March quarter. According to the bank, this reflected “strong investment performance, net inflows and FX gains”.
Household deposits rose by more than 10 per cent during the quarter.
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