CBA sets ambitious goal
(02 September 2010 – Australia) The Commonwealth Bank of Australia (CBA) has set the goal of slashing its cost-to-income ratio from 39.6 percent to 35 percent in the next three to five years.
The bank is set to take on Spain’s Banco Santander, currently with a cost-to-income ratio of 36 percent, for the title of the world’s most efficient retail bank.
CBA has made significant improvements over recent years, reducing their ratio from 47 percent four years ago, to 42.9 percent last year and now down to the current 39.6 percent.
The hope to achieve the ambitious goal by rolling its A$750 million 'real-time banking' technology investment, Core banking platform, which will be the technological base for more than 10 million savings and transactions accounts before the end of the year.
The targets could mean cost savings of up to A$100 million a year.
CBA's group executive of retail banking, Ross McEwan, said the target would be achieved by the bank growing its retail revenue while maintaining its cost controls.
CBA has set the asperstional target of 35 to 36 per cent, Mr McEwan told The Australian.
Most of the benefits come out of the revenue, in the banking industry it's easier to get drivers out of revenue because most of our costs, staff, technology, premises, they are reasonably fixed. So our focus is going to be on growing revenue and being able to hold the cost structure over time, Mr McEwan added.
The global average for a retail bank's cost-to-income ratio stands at 45 percent.
CBA has made significant improvements over recent years, reducing their ratio from 47 percent four years ago, to 42.9 percent last year and now down to the current 39.6 percent.
The hope to achieve the ambitious goal by rolling its A$750 million 'real-time banking' technology investment, Core banking platform, which will be the technological base for more than 10 million savings and transactions accounts before the end of the year.
The targets could mean cost savings of up to A$100 million a year.
CBA's group executive of retail banking, Ross McEwan, said the target would be achieved by the bank growing its retail revenue while maintaining its cost controls.
CBA has set the asperstional target of 35 to 36 per cent, Mr McEwan told The Australian.
Most of the benefits come out of the revenue, in the banking industry it's easier to get drivers out of revenue because most of our costs, staff, technology, premises, they are reasonably fixed. So our focus is going to be on growing revenue and being able to hold the cost structure over time, Mr McEwan added.
The global average for a retail bank's cost-to-income ratio stands at 45 percent.
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