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ANZ banks cops $559 million hit after customer-related remediation

The Advertiser 2019-10-08 06:35:00

Major lender ANZ has copped a blow to its profits by adding $559 million to its customer-related remediation efforts.

The bank announced to the ASX this morning the $405 million hit to its books for the second half of the financial year was due to the refund of fees and interest following reviews of Australian retail and commercial products.

Another $154 million is related to selling off its wealth business and takes its total remediation to $1.1 billion over 2018-2019.

“We recognise the impact this has on both customers and shareholders,” chief financial officer Michelle Jablko said in a statement to the share market.

“We are well progressed in fixing issues and have a dedicated team of more than 500 specialists working hard to get any money owed back to customers as quickly as possible.

In August, Commonwealth Bank became the latest major lender to reveal massive losses as a result of the scandals exposed in the Hayne royal commission.

Australia’s biggest bank will spend $918 million to try to win back the trust of its customers as well as an additional $358 million on risk and compliance programs related to failings heard during the inquiry.

The expenses combine for a $1.2 billion hit in the bank’s books, dragging its full-year profit down by 4.7 per cent to $8.49 billion — $10 million lower than analysts had expected.

“The key takeaways from my perspective are we’re making very good progress on becoming a simpler and better bank,” CBA chief executive Matt Comyn said.

The royal commission pressured the major lenders to restructure wealth management divisions, and the Commonwealth Bank announced in August it would exit the last of its aligned financial advice businesses.

The bank had already significantly reduced its exposure to financial advice, saying it will stop providing licensee services through Financial Wisdom by June and help it close.

Earlier in the year, Westpac revealed the effects of the royal commission to its books when it reported a 22 per cent slide in its half-year profit.

The major lender said it had put aside $617 million to cover customer refunds and other costs related to the fallout of the widespread inquiry into the sector.

It too restructured its wealth management divisions that resulted in a direct loss of $136 million.

“The past six months has been a turning point,” chief executive Brian Hartzer said.

“We are proactively addressing legacy issues while improving our products and services to ensure they deliver the right customer outcomes.

“We’re exiting personal financial advice to focus on the parts of our wealth business where we have a competitive advantage, and we are delivering significant cost savings by simplifying our business.”

At the time, Mr Hartzer admitted the country’s second largest bank had a lot of work to do to win back customers’ trust, saying Westpac had made changes to improve how it handles complaints while removing teller incentives.

The company said the controversies exposed in the royal commission had cost Westpac $1.45 billion over the past three years.

“We are centralising oversight of all remediation programs and have more than 400 employees working directly on remediation projects to make refunds to customers as quickly as possible,” the chief executive said.

Have the big banks won back your trust? Comment below. @James_P_Hall |

Originally published as ANZ bank cops $559 million blow