The Commonwealth Bank of Australia’s IT services expenses hit $1.94 billion in the 12 months ending 30 June, the bank reported today.
That represents a 31 per cent jump compared to the bank’s FY16 expenses.
The increase was primarily driven by a $393 million one-off expense for acceleration of amortisation on software, CBA said. However, underlying expenses grew 4 per cent “due to higher licensing expenses, lease costs and investment spend”
The bank’s investment spending dropped 7 per cent on the prior year to $1.28 billion, the bank said. It attributed to the drop to the completion of key phases of risk and compliance projects in FY16, significant progress made with branch transformation, the roll-out of refreshed ATMs in the prior year, and the timing of spend on productivity and growth initiatives.
The bank reported statutory net profit after tax of $9.93 billion for the full year, up 7.6 per cent, and cash net NPAT of $9.88 billion, up 4.6 per cent.
Accompanying CBA’s full year results, the bank today issued an update on its response to legal action initiated by AUSTRAC against it in the Federal Court. AUSTRAC has accused the bank of failing to meet its obligations under Australia’s anti-money-laundering regime.
A key allegation by AUSTRAC is that the bank’s Intelligent Deposit Machines (IDMs) facilitated money laundering. The bank has blamed a “coding error” for a failure to report transactions worth $10,000+ using IDMs.
The bank’s board said it has established a dedicated sub-committee of four directors to oversee CBA’s response to AUSTRAC’s statement of claim filed in the Federal Court.
The board claimed the bank has made significant progress on a program to strengthen its anti-money-laundering policies and processes. CBA promptly fixed the coding error involving the IDMs and changed the senior leadership in roles that oversee financial crimes compliance, compliance more broadly, and operational risk, the board said.
The bank also revealed it is spending $40 million on an upgrade to “the financial crime technology used to monitor accounts and transactions for suspicious activity”.
CBA’s board said other measures include recruiting more than 50 financial crime compliance professionals; strengthening its Know Your Customer (KYC) processes with a specialist hub, and upgrading additional fraud monitoring technology.
Earlier this week the board announced that it had slashed bonuses for the bank’s CEO and other executives as well as cut fees for non-executive directors by 20 per cent during the current financial year.