Westpac flags surprise $235m hit from litigation, remediation

Westpac has flagged a surprise $235m hit to its full-year result reflecting provisions for recent litigation and remediation costs.

Westpac Bank signage is seen at a branch in Adelaide, Friday, September 14, 2018. (AAP Image/David Mariuz) NO ARCHIVING

Westpac has flagged a surprise $235 million writedown to its annual result, reflecting provisions for recent litigation and the cost of remediating a range of advice and product issues.

The move comes ahead of tomorrow’s release of the financial services royal commission’s interim report.

While two-thirds of the impact from the writedown will be recorded as a revenue hit, with the remainder affecting the cost line, Westpac (WBC) said after the close of the market that costs associated with responding to the royal commission were not included.

The writedown covers fee refunds for advice that was never provided by the group’s salaried financial planners, refunds for inadequate financial advice from Westpac planners, and additional provisions to resolve legacy issues as part of the bank’s detailed product reviews.

There were also costs for implementing the three remediation programs, and estimated provisions for recent litigation over responsible lending and manipulation of the bank bill swap rate.

“Notwithstanding these new provisions, Westpac remains well-placed to meet APRA’s unquestionably strong capital benchmark,” the bank said in a statement to the Australian Securities Exchange.