The Commonwealth Bank of Australia (CBA) — Australia’s biggest bank — has just announced a cash net profit after tax of $9.6 billion for the last financial year. This was an 11% rise from last year.
The three other big banks — ANZ, National Australia Bank and Westpac — are yet to announce their annual profits but their mid-term reports suggest the Big Four will make a combined after-tax profit of about $30 billion.
Australian Council of Trade Union President Michele O’Neil criticised CBA CEO Matt Comyn opposing wage rises for workers as “inflationary” while taking a 35% pay rise. “Comyn made $6.97 million this year while his own workers’ wages are heading backwards to 2015 levels — he’s not concerned about the economy; he’s concerned about himself.
“Corporate greed is out of control,” O’Neil said, citing banking, oil, gas, civil construction and retail corporations pocketing billions in profits at the expense of workers whose real wages are falling.
“Workers have the lowest share of [gross domestic product] in recorded history, while company profits are at record highs,” O’Neil added.
The CBA’s poor treatment of its workers has been underlined by the Financial Services Union’ ongoing court action for $45 million worth of paid breaks that the bank is alleged to have denied some 3000 employees.
The 2018 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry found that the Big Four have been ripping customers off, money laundering for drug syndicates and turning a blind eye to terrorism financing.
So far, the CBA has been fined several hundred million dollars for crimes it has admitted to. Its former CEO voluntarily stepped down, but no executive has been jailed.
The CBA claims to have reformed its governance and corporate culture. But a report by the Australian Banking Association says the bank is still giving huge cash bonuses to encourage aggressive commercial practices in the lucrative home loans sector.
The banking royal commission’s final report identified the source of CBA and other banks’ bad behaviour as “not only by the relevant entity’s pursuit of profit but also by individuals’ pursuit of gain, whether in the form of remuneration for the individual or profit for the individual’s business”.
That part of the CBA’s corporate culture remains unchanged as the bank said the biggest reason behind its profit results was its ability to grab a larger share of the home lender market.
The Big Four now hold $1.87 trillion of the $2 trillion home loan market, the ABC reported on May 10. “Throughout 2021, as Australian house prices skyrocketed, Australians kept on taking bigger mortgages — many worth more than six times their income — pushing up the profits of the big four banks,” it said.
But as interest rates rise and house prices start to fall, many of the Big Four’s customers among the nearly 300,000 who took out huge home loans will be caught out.
These people could end up losing their homes to the banks, as wages decline while their cost of living and mortgage repayments rise and the value of the homes they bought falls.
The royal commission, and all the reports and court cases that followed it, ignored the worst behaviour of the Big Four: what they did with customers’ deposits.
Market Forces (MF) has revealed that the CBA is continuing to use funds to promote a massive expansion of the fossil fuel industry. It said that while climate scientists warn about the need to keep global warming to 1.5ºC the CBA’s policy settings “allow it to continue financing new oil and gas projects, and the companies pursuing them”.
MF said over the past year the CBA has financed Origin Energy and Beach Energy’s fossil fuel expansion projects as well as reportedly arranging a loan for Santos, which wants “to increase oil and gas production by at least 17% this decade”.
Imagine what could be done if the CBA, privatised in the 1990s, was taken back into public ownership and run as a not-for-profit service.
The systematic rip-off of customers and workers for profits and fat executive salaries and bonuses would end and workers’ hard-earned savings could be used to address the climate crisis and help solve other problems, like housing affordability.