Tuesday 8th October 2019
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ANZ Bank, the Australia-based parent of New Zealand's largest bank, says its annual results will be hit by an A$559 million after-tax charge to cover the costs of remediating over-charging and mis-selling products to its customers.
The bank is also warning there may be ongoing costs from problems it has yet to uncover.
"Within continuing operations, remediation charges recognized in the second half of 2019 will be A$405 million after tax, – A$485 million before tax – largely related to product reviews in Australia retail and commercial for fee and interest calculation and related matters," ANZ says in a statement.
"These include historical matters recently identified during the period, as well as refinements to estimates of existing customer compensation programmes and associated costs," it says.
The bank will also book A$154 million in remediation costs from discontinued operations – it sold 23 businesses in the six months ended March, freeing up A$12 billion of capital.
Total provisions for the year will be A$682 million, up from A$422 million the previous year.
ANZ reported statutory group profit of A$3.17 billion for the six months ended March, down 5 percent from the previous first half, and a flat A$6.4 billion for the 12 months ended September last year.
"The charges relate to issues that have been identified from reviews to date and these reviews remain ongoing," it says.
Chief financial officer Michelle Jablko says the bank recognises the impact these charges have on both customers and shareholders.
"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," she says.
The need for remediation within financial services companies was unmasked by Australia's royal commission into financial services which reported earlier this year after discovering myriad problems including institutions charging for services never delivered and charging dead people.
The Australian review prompted New Zealand's prudential regulator, the Reserve Bank of New Zealand, and the market conduct regulator, the Financial Markets Authority, to conduct their own review of New Zealand financial institutions.
The government is planning legislation based on their findings.
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