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Westpac prioritises risk management

Westpac announced risk management and rebuilding its culture will be its top priorities for 2021.

The bank paid $105 million to about 548,000 customers it has wronged during the first quarter ending December 2020, as announced in a trading update this morning.

As the AUSTRAC matter concludes and ASIC is no longer taking further action after Westpac paid a civil penalty of $1.3 billion relating to breaches of anti-money laundering and counter terrorism laws, the bank flagged it is still strengthening its risk management around financial crime remediation.

Several outstanding issues such as complex IT systems, risk management and approach to risk continue to be pain points.

The enforceable undertaking with APRA is on track, the bank said, adding that it is expanding its Customer Outcomes and Risk Excellence (CORE) Program to address financial and non-financial risks.

Last December, APRA found that Westpac did not have the means to effectively address wide-ranging risk governance gaps.

APRA deputy chair John Lonsdale described the undertaking with Westpac as a "serious step that indicates the severity of the situation".

"The integrated plan required by the CEU must be designed to deliver the sustainable risk governance step-change that APRA requires," Lonsdale said.

As a whole, Westpac reported an unaudited statutory net profit $1.70 billion for the first quarter, buoyed by a one-off impairment benefit of $501 million.

Westpac group chief executive Peter King said: "It has been a good start to the year with higher earnings, a stronger economy, and solid progress on our fix, simplify, perform strategic priorities."

"Our first quarter 2021 result was higher than the second half 2020 average, mainly from an impairment benefit reflecting both improved credit quality and a much-improved economic outlook."

He added that business portfolio simplification is underway and the exit of several units are progressing.

This included the sale of Westpac General Insurance, Westpac Pacific and NZ Wealth advisory; returning 300 out of 1000 offshore jobs to Australia and ending its relationship with IOOF.

Read more: WestpacAPRAJohn LonsdaleASICNZ WealthPeter King
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