Commonwealth Bank chair Catherine Livingstone has told shareholders the bank’s pivot away from wealth management has allowed it to focus on retail and business banking through the challenging pandemic conditions.
Like many of the big four banks, CBA has pursued a strategy of simplifying its operations and in May announced it would sell 55 per cent of its superannuation arm, Colonial First State, to private equity firm KKR.
“We have now substantially divested, or ceased, our wealth management businesses,” Ms Livingstone said. “This has allowed management to focus on driving operational excellence in retail and business banking, and on maintaining the Bank’s leadership in digital banking and innovation.”
Ms Livingstone’s address was published to the ASX ahead of the bank’s annual general meeting, the first of the big four to host its yearly shareholder event online.
“The fact that we are meeting virtually today, shows just how much and how quickly things can change. It also demonstrates how, collectively, we are able to adapt and find solutions,” Ms Livingstone said.
The sale of Colonial First State bolstered the bank’s balance sheet, contributing to its ability to pay shareholders the highest dividend permitted under prudential standards.
“The bank’s capital and operating performance continued to support returns for shareholders,” Ms Livingstone said, before pivoting to CBA’s achievements in governance and risk management.
CBA has now implemented more than three quarters of the recommendations put forward by consulting firm Promontory after an independent inquiry by the Australian Prudential Regulation Authority found systemic failures in its culture and governance that lead to widespread failings and misconduct.
Ms Livingstone quoted Promontory’s review of CBA’s progress, claiming: “In many respects, the bank is almost unrecognisable from the institution described in the Inquiry Report”.
“While this is very positive, we still have more to do,” she said.
CBA chief executive Matt Comyn’s multimillion bonus was criticised by proxy advisory firm ISS, as head of research Vas Kolesnikoff argued senior executives should not be rewarded for fixing problems caused by its leadership in the first place.
Ms Livingstone said the bank’s remuneration framework had “worked well” to drive better risk culture and more accountability.
“We are cognisant, however, of the need to keep evolving the framework. We are therefore making changes to ensure that it continues to help the bank meet the strategic challenges ahead.”
Ms Livingstone updated shareholders on its commitment to assisting a net zero emissions economy by 2050, claiming CBA had achieved its goal of sourcing renewable energy for all of its Australian electricity needs.
“This has allowed us to reduce our emissions and save costs,” she said.
The bank also funded $9.5 billion in climate bonds as at the end of June and approved $4.2 billion in loans to renewable energy projects. “Playing our part in the transition, is an increasing priority for the board.”
Source: Thanks smh.com