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The country’s second-largest lender by market capitalisation also lowered its earnings outlook, citing “subdued” financial markets.
Westpac said the one-off charge included provisions to pay out customers seeking remediation for wrongly charged fees, and costs associated with the sale of its life insurance unit.
The company cut the value of its Westpac Institutional Banking (WIB) unit by nearly A$1 billion after “reducing risk in the division through the exit of energy trading, consolidating our Asian operations and reducing our correspondent banking relationships which have all impacted earnings”, it said in a securities filing.
“At the same time, medium term expectations of a prolonged low interest rate environment, subdued financial markets income and elevated compliance expenses have impacted WIB’s earnings outlook,” the bank added.
Payouts and other costs associated with settling customer lawsuits would add another A$172 million to the one-off charges, while selling costs and tax adjustments linked to the sale of its life insurance unit would add A$267 million to the one-off items.
The bank is scheduled to report annual results on Nov. 1, and was expected to post a cash profit of A$6.5 billion, according to the average forecast of 13 analysts polled by Refinitiv before the charges were announced, nearly triple the previous year’s result which was impacted by COVID-19 loan repayment freezes and other macroeconomic shocks.
Westpac shares were trading down 0.5% in early trading on Tuesday, against a flat overall stock market.
($1 = 1.3602 Australian dollars)
