Under normal circumstances Commonwealth Bank boss Ian Narev would be confidently basking in the bank's glory of a record profit result, but its latest was marred by another scandal, this one topping the previous ones. The scandals have had a cumulative effect.
It was why Narev adopted a subdued demeanour when he fronted the investment community, pre-empting a barrage of questions with the comment: "Obviously the Commonwealth Bank's had a lot of attention over the last few days for not great reasons, for reasons that don't reflect well on the bank, or on me."
More BusinessDay Videos
- Video duration
- 00:57
Narev: CBA made 'mistakes'
Narev: CBA made 'mistakes'
Commonwealth Bank chief executive Ian Narev says the bank has 'made mistakes' relating to alleged breaches of anti-money laundering and counter-terrorism financing laws.
- Video duration
- 02:21
Why wage growth remains weak: NAB
Why wage growth remains weak: NAB
NAB chief markets economist Ivan Colhoun looks at the possible reasons for slow wage growth around the globe.
Up Next
ASX winners and losers - a snapshot
- Video duration
- 00:43
- Video duration
- 00:43
ASX winners and losers - a snapshot
ASX winners and losers - a snapshot
The stand out listings traded on the ASX captured at key moments through the day, as indicated by the time stamp in the video.
Up Next
Market volatility risks in the week ahead
- Video duration
- 02:43
- Video duration
- 02:43
Market volatility risks in the week ahead
Market volatility risks in the week ahead
Investors face the triple threat of increasing geopolitical risks, while Australian corporate earnings and jobs data are also vulnerable. This video was produced in commercial partnership between Fairfax Media and IG Markets.
Up Next
RBA identifies low wage growth risk
- Video duration
- 01:36
- Video duration
- 01:36
RBA identifies low wage growth risk
RBA identifies low wage growth risk
RBA governor Philip Lowe points to low wage growth as one of the key risks to the Australian economy.
Up Next
ASIC considers action against CBA
- Video duration
- 04:35
- Video duration
- 04:35
ASIC considers action against CBA
ASIC considers action against CBA
The corporate regulator will investigate whether the CBA's board complied with continuous disclosure laws when it decided not to alert investors to suspicious behaviour.
Up Next
S&P; drops in flight to safety
- Video duration
- 01:17
- Video duration
- 01:17
S&P; drops in flight to safety
S&P; drops in flight to safety
The S&P; 500 index has its biggest one-day drop in nearly three months as investors flee riskier assets for safe-haven plays.
Up Next
Amazon wants to enter ticketing market
- Video duration
- 01:02
- Video duration
- 01:02
Amazon wants to enter ticketing market
Amazon wants to enter ticketing market
Amazon is seeking to partner with US venue owners to sell event tickets, sources told Reuters, a move that could loosen Ticketmaster's powerful grip on the lucrative ticketing business.
Narev: CBA made 'mistakes'
Commonwealth Bank chief executive Ian Narev says the bank has 'made mistakes' relating to alleged breaches of anti-money laundering and counter-terrorism financing laws.
From a pure numbers basis, the bank is a well-run profit machine, beating market forecasts to post a record profit of almost $10 billion. It maintained margins, relied less on mortgage brokers and was able to demonstrate that asset quality is improving and bad debts are falling. Even its loan growth is coming from the right areas.
But behind the numbers, the scandals keep coming, which suggests it has serious control flaws.
The latest scandal relates to allegations by Austrac that CBA breached anti-money laundering and counter-terrorism laws. In some cases it enabled criminals to create fake names, which enabled drug dealers, organised crime syndicates and terrorists launder and transfer money overseas.
At the end of the day, CBA is a Jekyll and Hyde.
Velocity Trade banking analyst Brett Le Mesurier says from a sales and credit risk management perspective, the bank seems to have the right balance, but it seems to allocate insufficient resources to overseeing the broader risks the bank undertakes.
Narev, for his part, managed to keep the spin going, on the one hand, admitting to mistakes, but then rattling off improvements in customer satisfaction surveys, people and culture surveys and the success of the bank's Speak Up policy for whistleblowers.
But given what we know, including the treatment of some whistleblowers, it is hard to reconcile the surveys with reality.
For the past year CBA has been batting off a scandal in its life insurance division, exposed after its former chief medical officer spoke out, which resulted in a parliamentary inquiry, an investigation by the corporate regulator and a broader investigation of the $44 billion industry.
Narev confirmed it was in discussions with potential buyers to sell the life insurance business, but he felt compelled to make it clear that the strategic review had been put in place "quite a long time ago" well before the media coverage.
The brutal reality is the life insurance business is making a small profit, $34 million in 2017, after being squeezed by rising claims and increasing pressure to pay out claims to avoid further media scrutiny.
The point is, the bank might make stellar profits, but there comes a time when Jekyll and Hyde need to work themselves out before they destroy each other.