Australia’s leading bank Commonwealth Bank of Australia (ASX: CBA) has suspended the preparations for the demerger of its wealth management and mortgage broking businesses so that it could prioritize the implementation of Royal Commission’s recommendations.
As part of the bank’s strategy of becoming a more simpler and better bank, Commonwealth Bank of Australia had announced the exit of its wealth management and mortgage broking businesses. However, it seems like the exit of these businesses might get delayed, as CBA has decided to pay more focus on implementing Royal Commissions’ recommendations. The bank intends to remediate its past issues through these recommendations which will help it to earn back the trust of the community.
The bank had set aside $1,460 million for remediation and program cost which includes $1,215 million relating to the wealth management businesses.
Recently the bank’s CEO Matt Comyn appeared before the House of Representatives Standing Committee on Economics, where he informed that CBA is making improvements in addressing customer complaints, to ensure that problems of its customers’ experience are resolved efficiently.
While providing an update on the bank’s progress, CBA informed that it supports the commissioner’s recommendation to amend the law to introduce an obligation on mortgage brokers to act in the best interest of a potential borrower. Further, the bank informed that it supports the reforms to ensure good customer outcomes for customers of mortgage brokers. CBA also supported the recommendation to APRA regarding an amendment to Prudential Standards APS220, and it will work to implement APRA’s framework as soon as it is released. The bank is establishing an external panel of valuation firms to undertake valuations on rural properties or using independent external data in all cases.
CBA supports the commissioner’s recommendation that pricing should not be increased when a customers’ financial difficulty is caused by a natural event which is outside their control. Consistent with this recommendation, the bank had announced that it will not be charging default interest on agricultural business term loans if a financial difficulty is caused by a natural event. Consistent with the Royal Commission’s recommendation, CBA is moving to a new model in its salaried advice channel, where customers pay only after the service is delivered. Further, the bank is making sure that its customers receive quality advice in their best interests.
Now, let’s have a glance at CBA’s share performance and the return it has posted over in the last few months. The stock is trading at a price of $72.930, down by 0.164% during the day’s trade with a market capitalisation of ~$129.32 billion as on 14 March 2019. The counter opened the day at $73.390 and reached the day’s low of $72.510 with a daily volume of ~2,031,806. The stock has provided a year till date return of 2.93% & also posted returns of 2.63%, 4.09% & 2.58% over the past six months, three & one-months period respectively. It had a 52-week high price of $77.660 and touched 52 weeks low of $65.230, with an average volume of ~3,249,927.
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