Westpac flags $1.22b hit to earnings

Marco Green
October 26, 2020

SYDNEY-Westpac Banking Corp. said 1.22 billion Australian dollars (US$871 million) of exceptional items, including a writedown of its life insurance services business, would drag down its second-half cash earnings.

The bank on Monday outlined write-downs and revaluations of its operations including life insurance which comprised $816 million.

The A$1.22 billion hit to cash earnings also includes an increase in provisions related to customer refunds and litigation, and a write-down for capitalised software, the bank said.

An A$26 million pre-tax gain on the sale of its stake in Zip Co in the first half of fiscal 2021 partially offset the other write-downs, Westpac said.

These included insurance customers, and business customers provided with the wrong loan type.

There was also the additional $404 million set aside from the $1.3 billion penalty Westpac will pay over breaches of money laundering and terror financing laws.

Chief executive officer Peter King is seeking to restore the bank's battered reputation after the money-laundering scandal led to the departure of predecessor Brian Hartzer.

In a note to shareholders this morning, Westpac advised that when it presents its full year 2020 financial results on Monday November 2, investors can expect a blow to its top line results.

Westpac's stock is now trading at $18.76, having fallen 0.11 per cent since the announcement.

Other reports by Click Lancashire

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