Major bank flags $559m in new remediation costs

ANZ has announced that its second-half 2019 (2H19) cash profit will be impaired by a charge of $559 million (after-tax) as a result of increased provisions for customer-related remediation.

The costs include a $405-million after-tax ($485 million before tax) charge within continuing operations, which the bank said largely related to product reviews in Australia retail and commercial for fee and interest calculation and related matters. 

ANZ added that such costs also include historical matters recently identified during the period, as well as refinements to estimates of existing customer compensation programs and associated costs.

Further, within discontinued operations, remediation charges recognised in ANZ’s 2H19 results will be $154 million after tax ($166 million before tax), which ANZ claimed are primarily associated with the advice remediation program and customer compensation charges for other wealth products.

According to the major bank, the charges relate to issues that have been identified from previous reviews and from reviews that remain ongoing.  

Following the announcement, ANZ chief financial officer Michelle Jablko said: “We recognise the impact this has on both customers and shareholders.

“We are well progressed in fixing issues and have a dedicated team of more than 500 specialists working hard to get any money owed back to customers as quickly as possible.”

This follows last week’s announcement from NAB that it has provided for additional charges of $1.18 billion after tax for customer remediation and software, which the institution expects will erode its cash earnings for the second half of the year by $1.12 billion.

ANZ will release its full-year 2019 financial results on 31 October.

[Related: NAB to take additional $1.18bn remediation hit]