Here’s why the Commonwealth Bank will ignore the money-laundering scandal unless it is handed a colossal fine that will leave executives wishing they’d never heard of intelligent ATMs: the bank earned just on $10 billion in net profit in the year to June (or a net profit margin of 22%). Its return on equity was a massive 16%, one of the highest in the world, even if it’s down from 16.5% last year.

Banking in Australia at the top end of the market is all about picking a number, (any number) and moulding the accounts to achieve that. Just take the basics from the CBA results, out this morning. The basic equation is that the bank reported a small, 1% rise in revenue to $44.9 billion, but such is its pricing power that it boosted profits by 8% for the year to $9.9 billion (both are records, by the way). And this rise (much faster than the 1.9% inflation rate) was achieved on a fall of three points in the bank’s most important source of income, its net interest margin, to 2.11% (or 2.11 cents in each dollar of interest income). Despite that, net interest income actually rose 4% to $17.6 billion, thanks to the higher interest rates for investor borrowers in property (thank you, negative gearing). As a result, the bank boosted its operating income by 3.8%,while its expenses rose just 2.4%.

But the best measure of how much money the CBA is raking in is the percentage its “operating income” (AKA profits before interest and tax) makes up of total revenue. In the year to June, the CBA reported total operating income of $26.005 billion compared to revenue of $44.949 billion — which gives a gross profit margin on 57.8%. That’s almost as good as the fabulous iron ore mines of BHP and Rio Tinto in the Pilbara — and up from the 55.7% share in 2015-16. 

Dividends to shareholders were boosted — a record full-year payout of $4.29 a share, or 75% of net profit. The final dividend was also a record, $2.30. That is the bank saying that will keep the 800,000 shareholders quiet while the management “fixes” the money laundering problem. 

Forget this garbage about the bank tax undermining the financial system. The CBA’s results show that it is generating massive profits of the kind that you can only get via an oligopoly, as long as you’re prepared to keep the pressure on costs. And part of that pressure, of course, is cutting regulatory corners wherever you can, and not rushing to fix regulatory problems unless you absolutely have to. That’s why the bank allowed its ATMs to be used for money-laundering for years without bothering to seriously address the problem, which its chair is now complaining is costing it $125 million (so far) to deal with.

Only a fine that chews up a solid whack of this year’s profit — a fine that shocks directors, shareholders and executives into deciding that the bank’s culture of cut-price compliance has to end — will do.