Annual General Meetings

The Commonwealth Bank’s damaged reputation was the dominant theme at its November AGM, with investors using every item on the meeting agenda to express their dismay over its string of recent scandals.

CBA chair Catherine Livingstone AO FAICD and CEO Ian Narev gave a textbook defence of CBA’s performance and AUSTRAC money-laundering allegations during tense questioning by investors at Sydney’s International Convention Centre.

They acknowledged deficiencies, apologised and outlined future actions.

“This has damaged our reputation with customers, shareholders, regulators and government,” said Livingstone. “We are determined to ensure that our risk-management systems, including regulatory compliance, are of the high standard expected of us.”

The shift in community attitudes — that shareholders will not excuse poor culture and practices in the pursuit of returns — was made clear to directors.

CBA’s annual net profit rose to $9.9 billion with a total dividend of $4.29 a share for the 2016–2017 financial year. Its customer satisfaction was the best of the major banks, as was its 9.1 per cent annual return over the past decade.

“The financial performance of the past year and the improvements in products and services to customers are two measures of success, but we need to achieve these outcomes in ways that also reflect the values of the bank,” Livingstone said. One shareholder reminded directors that the CEO had given assurances, at an AGM after the financial planning scandals, that there would be no repeat of the situation — only to see subsequent issues emerge.

“I don’t want to see situations where we’re embarrassing ourselves with these scandals into the future.”

The bank easily survived a protest vote against its board appointments and executive remuneration (91.4 per cent of shareholders support them). Board directors took a 20 per cent pay cut and the bank’s executive short-term bonuses were also cut.

Livingstone said the bank’s failure around the AUSTRAC money-laundering allegations had been confined to a four-week window. She said CBA would defend the shareholder class action vigorously and would make public the bank’s defence, due to be filed by 15 December.