Westpac Banking Corporation has sniveled for $235 million reduction in its full-year 2018 cash earnings as it increases provision for customer refunds in respect of inadequate financial services provided by the group. Along with this, the payment of penalties enforced in the recent legal actions have imposed an additional burden on Bank’s cash earnings.
Today when Banking Royal Commission is set to release the interim report, Westpac said that tracking back the detailed analysis to 2008, the Bank has decided to uplift the provision for customer refunds in relation to advisory fees charged by the Group’s financial planners for services not provided.
Since the start of the hearing, charges of “fees for no services” stood in the highlight for Banking Royal Commission. National Australia Bank and Westpac have been accused the most for charging fees from their customers and not providing the services as due.
Westpac further informed that though the details of additional costs and provision are yet not finalized, it is expected that two third of the burden will be recorded as negative revenue, bringing down the cash earnings by $235 million. Whereas, the remaining impact is reported to be recognized as costs of the company.
The program of regressive review on poor or no services provided, and fees charged is said to be continued by the company until the end of 2019. Westpac told that it will include the further inquiry of company’s aligned partners with the view to take into consideration the additional costs in association with advice fees charged by them.
Further, Westpac Financial Services Group has decided to shrug off its wholly owned subsidiary, Ascalon Capital Managers Limited. It was reported that after market close yesterday, 27 September 2018, Westpac signed an agreement with Generation Development Group Limited (ASX: GDG) under which Westpac ceases to be the owner of Australian funds management business, Ascalon, upon the completion of the transaction, expected to occur by March 2019. This reflects the interest of insurance company GDG Limited in Westpac’s fund management business, which will clutch the complete ownership of Ascalon by making investment in it.
The company however told that after the completion of transaction, Ascalon will continue to own minority equity interests in the investment management firms Deepwater Capital and Morphic Asset Management.
Report on 2018 full-year results are expected to be released by Westpac on 5 November 2018.
Banking sector has been seen picking up today, and Westpac also was in green. Westpac’s share price rose by 2.535% to $28.31 on 28 September 2018 (3:30 PM AEST). The stock has seen a performance change of -13.58% over the past one year.
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