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Another major bank flags remediation-related profit hit
Westpac has announced that its cash earnings for the second half of 2019 will take a $341 million hit, thanks to customer remediation programs.
Another major bank flags remediation-related profit hit
Westpac has announced that its cash earnings for the second half of 2019 will take a $341 million hit, thanks to customer remediation programs.
The big four bank said approximately 72 per cent of the impact relates directly to customer payments that are inclusive of interest, while the remaining 28 per cent relates to the costs associated with running remediation programs.
Of the total impact on cash earnings, $168 million will be designations associated with financial advice, while $109 million will be allocated to provisions associated with interest-only loans that did not automatically switch over to principal and interest loans when they were required to.
For Westpac CEO Brian Hartzer, “a key priority in 2019 has been to deal with outstanding remediation issues and refund customers as quickly as possible”.
“The additional provisions announced today are part of that commitment.”
Forming part of Westpac’s “get it right, put it right” initiative, the CEO said: “We are determined to fix these issues and stop these errors occurring.”
“We will continue to review our products and services to ensure they deliver the right outcomes for customers, and if necessary, make further provisions,” he continued.
It brings Westpac’s customer remediation bill to $958 million in 2019 alone.
The news comes after NAB indicated it would be setting aside an additional $832 million for remediation-related expenses in the second half of 2019 at the beginning of October.
Since then, ANZ also announced its 2019 second-half cash profit would be impacted by an additional $559 million for customer-related remediation.
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