Investment
Westpac takes $1 billion profit hit

Westpac's customer compensation bill has added $341 million in the second half of 2019, bringing the remediation total to $958 million for the year.

Westpac chief executive 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 today 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."

The majority of costs relate to customer payments, $191 million for ongoing advice service fees, with the remainder associated with the costs of remediation programs.  The banks said the majority of the costs relate to issues identified in prior periods.

The banks wealth division also took a blow, denting profit by $172 million for the year, bringing the banks total profit loss for 2019 to around $1.13 billion.

Westpac delivered a warning to shareholders over potential outcomes from the Australian Transaction Reports and Analysis Centre's (AUSTRAC) enquiry.

AUSTRAC is investigating the banks failure to report a large number of International Funds Transfer Instructions (IFTIs), which Westpac self-reported to the agency.

"Westpac has not yet received an indication from AUSTRAC about the nature of any enforcement action it may take. The Group is continuing to work with AUSTRAC in relation to these matters," the bank said in its release.

"Any enforcement action against Westpac may include civil penalty proceedings and result in the payment of a significant financial penalty, which Westpac is currently unable to reliably estimate."

The bank also announced internal changes to its operating divisions, with businesses previously relating to BT Financial Group having been reassigned.

Insurance operations have been moved into an expanded Consumer division, Superannuation, Investments, Platforms and Private Wealth businesses have been moved into an expanded Business division, and the Advice operations (which were wound down during the year) have been moved to Group Business.

Westpac is the last of the big four to announce further customer remediation costs following the fallout from the Royal Commission.

ANZ saw remediation costs breaking $1 billion, while National Australia Bank added an extra $1.18 billion bringing its total remediation bill over $2 billion.

Commonwealth Bank said it has compensated customers over $2 billion in the past financial year.

Read more: WestpacAUSTRACBT Financial GroupANZBrian HartzerCommonwealth BankNational Australia Bank
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