CBA ICT spend increases in 2010/11

The Commonwealth Bank has recorded a notable increase in IT spending to $1.104 billion for the year to June 30 2011, up seven per cent year on year

The Commonwealth Bank (ASX:CBA) has recorded a notable increase in IT spending to $1.104 billion for the year to 30 June 2011, an increase of seven per cent year on year.

Application maintenance and development took the lion’s share of spending at $235 million, up 12 per cent from 2010's $209m.

Data processing grew the most — 18 per cent — to $267m up from $227m, while desktop expenditure declined some 15 per cent to $120m down from $141m in 2010.

Communications spend grew 11 per cent to $221m up from $199m while amortisation of software assets marginally increased to $183 million from $178m in 2010.

IT equipment depreciation came in at $78 million, up four per cent from $75 million in the previous year.

In March, the bank claimed it had made significant progress in a core banking modernisation program that the country's biggest lender has been pursuing since April 2008.

CBA said 1.2 million term deposit accounts and 10 million retail deposit accounts had been moved to the new platform during 2010, and all retail deposit and transaction customers had access to real-time banking.

Business deposit accounts were due to be moved to the new platform during 2011, and CommBiz would be integrated.

The bank had made "excellent progress-to-date," the bank said in slides to accompany a presentation on Monday afternoon in Sydney.

The modernisation was "already delivering real customer and business benefits (and positioned) CBA for transformational change in banking".

The aims of the modernisation program were to improve customer service, find growth opportunities, increase efficiency and manage risk in aging systems.

In August last year, the banks said ICT expenditure totalled some $1.029 billion for the year to 30 June 2010.

In the bank’s profit statement, released to the ASX, the CBA said it had spent some $209 million on application maintenance and development, an 11 per cent increase year on year. Data processing, the highest area of expenditure, came in at a cost of $227 million, up 12 per cent year on year, while its desktops costs were $141 million, down one per cent.

Communications costs were $199 million, up seven per cent, amortisation of software assets cost the bank $178 million, up a sizable 35 per cent, while IT equipment depreciation was $75 million, up 10 per cent.

The bank also noted that the capitalised software costs (net of amortisation) totalled $950 million as at 30 June 2010. In the half year to December 2009 this was $799 million, an increase on the half year to June 2009 at $673 million.

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