The National Australia Bank has joined Westpac in announcing some balance sheet and earnings tidying up ahead of the release of their interim reports in a couple of week’s time.
Westpac revealed write-downs and charges totaling $1.4 billion, the NAB on Monday revealed that it’s interim its earnings will be cut by $1.14 billion due to rising remediation costs, troubles in the life insurance business, and investments in technology, all compounded by ongoing challenges of the coronavirus pandemic.
In a statement to the ASX, NAB said it would increase its provision for customer remediation by $188 million after-tax, with more than two-thirds related to its wealth division, including superannuation services, and 23% for banking-related measures and 8% for Bank of New Zealand.
The bulk of the increased provision was related to “newly identified matters, the most significant of which were issues relating to workplace superannuation”.
This, combined with software investment, will have a “large and notable” impact on cash earnings, the statement said.
NAB said more details would be revealed at its half-year report in May, as well as certainty on dividend payouts and the impact of the pandemic on NAB’s balance sheet and earnings.
The bank said it would be a charge of $742 million for software capitalisation changes.
The bank’s life insurance arm MLC Life has also been impacted by the “challenging operating environment” resulting in a 37% reduction in the carrying value of the investment.
NAB will take a $214 million write-down against its investment MLC amid a “challenging operating environment”.
NAB reports its interim results on May 7. The shares fell 2.3% to $16.
Last week rival lender Westpac revealed $1.43 million in expected first-half write-downs and provisions, including a potential $900 million penalty for its alleged money laundering and child exploitation scandal.
Westpac will also hold off announcing its decision on first-half dividends at its first-half results. It says it will release before its May 4 release date, details of the impact of COVID-19.NAB did not mention if it would follow.
