Westpac takes huge insurance charge against earnings

Westpac takes huge insurance charge against earnings | Insurance Business

Westpac takes huge insurance charge against earnings

Westpac has once again taken a significant blow against its earnings, only a month after it was hit with a penalty for the biggest breach of anti-money laundering laws in the country.

Bloomberg reports that Westpac suffered a whopping AU$1.2 billion charge against its second-half earnings to cover a record money-laundering fine and the accumulating cost of compensating customers for years of misconduct.

Charges included AU$568 million to write down the value of its software and its life insurance and auto-finance units; AU$182 million to compensate customers, including business borrowers and those wrongly-charged insurance fees; and AU$55 million from asset sales and revaluations.

Another charge saw it hit for AU$415 million for the money-laundering fine, including legal costs. The bank had previously provisioned AU$900 million for a settlement, but the cost skyrocketed after further breaches were uncovered.

Earlier this year, the bank deferred paying a dividend as bad-debt charges skyrocketed amid the COVID-19-induced recession. Last month, it was hit with a AU$1.3 billion penalty for breaching the anti-money laundering law.