Westpac Banking Corp. expects its fiscal first-half profit to take a A$260 million hit from provisions for customer payments and related costs.
The lender said in a March 25 release that about 90% of the estimated A$260 million impact on cash earnings relate to issues identified in previous years. Around half relate to its financial advice business, while the rest are tied to business and consumer banking. The provisions also include costs linked to implementing the bank's remediation programs.
The cash earnings impact of customer remediation provisions in fiscal 2017 and fiscal 2018 were A$118 million and A$281 million, respectively. Westpac's cash earnings for the previous corresponding fiscal first half ended March 31, 2018, came to A$4.25 billion.
The bank is compensating customers for certain ongoing advice service fees charged by its financial planners, as well as refunds for customers that had interest-only loans that did not automatically switch to principal and interest loans.