WESTPAC'S $8 BILLION PROFIT AS IT SPENDS TO 'PUT THINGS RIGHT'

WESTPAC'S $8 BILLION PROFIT AS IT SPENDS TO 'PUT THINGS RIGHT'

AUSTRALIA'S second largest bank, Westpac (ASX: WBC), has booked a bumper profit of $8.062 billion and spent some of its earnings on "putting it right" for disadvantaged customers. 

The 3 per cent rise was boosted by growth in Australian mortgages, but the bank took a significant hit to profits from customer service issues.

Overall cash profit took a $118 million hit from refunds and payments to super customers who lost out thanks to unsatisfactory disclosure practices, package customers who did not receive benefits to which they were entitled, and others who did not receive on-time advice to which they were entitled.

The $118 million hit was equivalent to 1.5 per cent of the group's total cash profit.

Chief executive, Brian Hartzer, says the company had to "put right" the mistakes made.

"As part of our 'get it right, put it right' program we've been reviewing our product and services and the way we have engaged with our customers," says Hartzer.

"Where we have found issues that we need to put right, we ensure that no customer has been disadvantages from those past practices."

The lender's results showed a cash profit rose from $7.822 billion a year ago, helped by a 4 per cent lift in earnings from the consumer division.

Hartzer says the bank had managed to grow its loan book, while ensuring it stayed within regulatory limits on investor and interest-only lending.

"Our primary goal in 2017 was to carefully balance growth and returns, while meeting all our new macro-prudential regulatory requirements," says Hartzer.

The bank also flagged a $95 million pre-tax slug from the government bank levy.

These results, and the group's attempts to "put it right" with customers, come amid a rate rigging case in the Federal Court.

Last week, recorded telephone conversations were played in the Federal Court which captured a Westpac trader saying he was going to "f... the rate" in relation to his alleged attempts to manipulate the bank bill swap rate.

The court was also told that recordings and emails also contained references to "push the rate set higher", "dish it out so it moves higher" and "trashing it", all of which allegedly showed Westpac's true intentions.

Westpac was one of three banks which faced trial on allegations of rate rigging between 2010 and 2012. ANZ and NAB have reached in-principal settlements with ASIC to pay penalties which are believed to be $50 million each.

The Westpac results also follow last week's announcement by NAB that it would lay off 6,000 employees and employ 2,000 new staff after reporting a $5 billion profit.

Westpac only saw its worker headcount reduce by one per cent over the year as it shed 484 full-time workers. The bank cited automation and productivity benefits as the reason for the one per cent reduction of staff.

Shares in Westpac were down 2.38 per cent at around 2pm (AEDST) to $32.48 per share.

Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.

Business News Australia

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

Crypto staking: a new way to earn passive income
Partner Content
You may be familiar with traditional ways of earning passive income such as trading sto...
Etoro
Advertisement

Related Stories

Qantas acquires Byron Bay-based travel agency TripADeal

Qantas acquires Byron Bay-based travel agency TripADeal

Australia's flagship airline Qantas (ASX: QAN) has taken a majo...

The Star “cleansing” continues with more management resignations

The Star “cleansing” continues with more management resignations

Evidence given today at a review into casino and resort operator Th...

Drone tech company Aerologix flying high after closing $4.2 million raise

Drone tech company Aerologix flying high after closing $4.2 million raise

Sydney-based drone tech company Aerologix is taking its operations ...

Spilling into the market: Ulu Hye cracks deal with Woolworths

Spilling into the market: Ulu Hye cracks deal with Woolworths

Plant-based milk start-up Ulu Hye has announced it will be launchin...