Westpac chief executive Brian Hartzer relinquished a $1.6 million cash bonus for the year, as income for the group's wealth management business fell significantly.
Releasing its annual report and full year results to the market this morning, Westpac reported a $6.78 billion profit, 16% lower than last financial year.
According to Hartzer, the result was disappointing and reflects both the "challenging, low-growth, low interest rate environment", and the impacts of remediation and the restructure of its wealth business, which combined made a $1.1 billion dent in cash earnings.
"Excluding these notable items, cash earnings were down 4% on FY18, which was mainly due to a reduction in wealth and insurance income from the exit of our financial planning business, higher insurance claims and the impact of regulatory changes on revenue," Hartzer said.
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Wealth management and insurance income fell by 50% against 2018 numbers, which Westpac said was due to an additional $531 million in remediation and litigation costs, while the cessation of grandfathered commissions hit the bank to the tune of $42 million.
Life insurance income was down $39 million compared to 2018, due to the implementation of the government's Protecting Your Super suite of regulatory changes.
Hartzer said the changes in Westpac's wealth arm - including exiting financial planning and migrating MySuper accounts - hurt revenue in the short term but would support customers and help the bank "build a more sustainable business."
The Westpac boss noted the bank's efforts to act on the Royal Commission's recommendations, describing 2019 as "a watershed year" for the bank.
However, according to the annual report, the "watershed year" wasn't enough to see Hartzer earn a cash bonus, with the board unimpressed by some "poor customer outcomes" highlighted by the Royal Commission.
Hartzer recommended Westpac's directors skip his cash bonus, which was likely to land at around $1.6 million after his performance scorecard found him eligible for about 40% of his $4 million maximum short term variable remuneration for the year.
Examining the matter in its own right, the board noted Westpac's "poor" non-financial risk management outcomes - including a zero outcome for non-financial risk measures in Hartzer's scorecard, despite increased investment in Westpac's capability - and agreed to forego his bonus.
"The board separately considered the matter and determined that a zero short term variable remuneration outcome for 2019 was appropriate to reflect accountability for poor non-financial risk and financial outcomes, as well as some poor customer outcomes, including those highlighted at the Royal Commission," Westpac's annual report read.
Westpac also announced a $2.5 billion capital raising aimed at strengthening its balance sheet and enabling the creation of a larger buffer than APRA's CET1 capital ratio benchmark of 10.5%.
The raising will see Westpac offer a fully underwritten $2 billion institutional share placement, and a non-underwritten share purchase plan, which the bank is targeting to raise around $500 million.