Commonwealth Bank faces higher expenses in the current financial year, largely as a result of regulatory and accounting changes. However, it said, it would avoid short-term cost cutting.The bank reported operated expenses of A$9.6 billion for the year to June - an increase of four per cent over the previous year.Commonwealth Bank's chief financial officer, David Craig, said system changes and balance sheet adjustments necessitated by regulatory reforms would add substantially to costs. Other factors that would have an impact included a change to the accounting treatment of defined benefit superannuation plans.Craig said the bank was taking a conservative view of the economic outlook and would not release any provisions from the economic overlay in its collective provision.CBA chief executive Ian Narev said the bank had some flexibility on the expense side because it no longer had to allocate budget to its core banking modernisation project.However, Narev said, he was keen exploit the capabilities of the banking platform by maintaining investment in innovations. These include mobile banking improvements, new merchant payment technology, everyday settlements, video-conferencing and the new wealth service, MyWealth.Narev said: "You will continue to see innovation, period after period."He said the bank would maintain its focus on long-term productivity management rather than embark on a short-term cost cutting program.