Commonwealth Bank of Australia (CBA) has reported a cash profit of A$2.35bn ($1.7bn) for the third quarter of fiscal year 2018, a fall of 2% compared to the average of the first two quarters of the first half of FY18.
The bank’s statutory net profit for the quarter ended 31 March 2018 stood at AUD2.3bn.
Operating expenses increased 3%, due to higher regulatory and compliance costs, while operating income dropped 4%.
The group’s common equity tier 1 (CET1) APRA ratio was 10.1% at the end of March 2018, while leverage ratio was 5.2% on an APRA basis. The bank also said that funding and liquidity positions during the quarter remained strong.
At the same time, CBA also reached an in-principle agreement with the Australian Securities and Investments Commission (ASIC) to settle charges of manipulating the bank bill swap rate (BBSW) rate.
Under the settlement, CBA will have to admit that it was involved in unconscionable conduct, and rigged the BBSW rate five times between February and June 2012. The bank will also have to acknowledge that it lacked adequate policies and systems to monitor such activities.
The bank will have to pay $5m as penalty, $15m to a financial consumer protection fund, and $5m towards ASIC’s litigation and investigation costs. The in-principle agreement is subject to Federal Court approval.
The bank also agreed to enter into an enforceable undertaking with ASIC, under which it will appoint an independent expert to review its BBSW business.