Westpac to wear additional $341m in remediation

Westpac Group has announced that its cash earnings in the second half of the 2019 financial year (2H19) will be reduced by an estimated $341 million as a result of its customer remediation programs.

Of the $341 million impact on cash earnings, approximately 72 per cent relates to customer payments (including interest), while the remaining sum relates to costs associated with running these remediation programs.

Of the total cash earnings impact:

• provisions associated with financial advice total $168 million; and
• provisions associated with interest-only loans that did not automatically switch, when required, to principal and interest loans total $109 million.

Following the announcement, Westpac CEO Brian Hartzer said: “A key priority in 2019 has been to deal with outstanding remediation issues and refund customers as quickly as possible. The additional provisions announced are part of that commitment.

“As part of our ‘get it right, put it right’ initiative, 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.”

Both ANZ and NAB have also announced that their FY19 earnings will be impacted by new remediation expenses.

Westpac is scheduled to release its FY19 results on Monday, 4 November.

 [Related: NAB flags $559m in new remediation costs]