ANZ annual profit to be hit by customer compensation, other charges
Australia and New Zealand Banking Group has flagged an $824 million hit to its annual result due to customer compensation for services that either weren't provided or were inadequate as well as other charges.
ANZ said the estimated impact on its full-year profit after tax from continuing operations was $697 million, with another $127 million for its wealth business sold to IOOF last year.
"These relate to issues that have been identified from reviews to date," ANZ said in a statement. "These reviews remain ongoing."
The unaudited hit flagged on Monday is weighted towards the second half, with $711 million to be recorded in the six months to September 30.
Of that second-half provision, $374 million relates to customer compensation, $206 million is for accelerated amortisation on software, $104 million is for a restructuring of its technology team, and $27 million relates to external legal costs stemming from the banking royal commission.
The No.3 lender's results are scheduled to be released on October 31. It last year delivered an annual cash profit of $6.9 billion.
ANZ, much like the rest of Australia's "big four" banks, has been under pressure as the royal commission has exposed widespread wrongdoing including charging "fees for no service".
The move by ANZ follows a similar one by No.2 lender Westpac Banking Corp, which last month said its annual cash earnings will fall by about $235 million due to provisions for customer refunds and litigation.
The Australian Securities and Investments Commission (ASIC) in August suggested banks' compensation bill for the fees-for-no-service scandal could exceed $1 billion.
More to come
BusinessDay and wires
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