Westpac has leaked some more red ink out into the market place ahead of its first-half balance date next Friday.
The bank warned in a statement yesterday that first-half profit will take a $260 million hit from refunding customers in its financial advice, consumer and business banking arms.
And Westpac indicated that will not be the last of the losses.
Westpac said first-half results, to be delivered in early May, will include a $260 million provision for customer remediation, with about 90% of the costs relating to problems from previous financial years.
About half the costs relate to its financial advice business, the sale of which (and the loss of two senior executives) were announced last week.
The remainder relate issues in its consumer and business banking divisions.
The news came before the opening of the trading yesterday saw wide spread falls across the entire market.
Westpac shares lost 1.1% to 26.22.
Westpac said in its statement that these payouts did not include compensation for the “authorised representatives” in its financial advice division — self-employed advisers who operated under the bank’s financial services licence — because of difficulty in accessing the necessary files.
The bank said it would be assessing provisioning requirements for its authorised representatives as part of its first-half results, meaning the write-offs and remediation costs could rise.
“A key priority is to deal with outstanding remediation issues and refund customers as quickly as possible,” chief executive Brian Hartzer said.
“As part of our ‘get it right, put it right’ initiative, we are determined to fix these issues and stop these errors occurring again. We will continue to review our products and services to ensure they deliver the right outcomes for customers, and if necessary, make further provisions.”
