Home | Latest News | Westpac takes 62% profit hit

Westpac takes 62% profit hit


Westpac’s performance in First Half 2020 was significantly impacted by the COVID-19 pandemic, legal costs and impairment charges.


First Half 2020 financial results were considerably lower over both the prior half and prior corresponding period due to the immediate and expected flow-on impacts of COVID-19 on impairment charges

Net profit attributable to owners of Westpac Banking Corporation for First Half 2020 was $1,190m, a decrease of $1,983m or 62% compared to First Half 2019.

First Half 2020 included a significant increase in impairment charges due to the expected economic impact of the COVID-19 pandemic, costs associated with AUSTRAC proceedings including a provision for a potential penalty, and the impact of estimated customer refunds, payments, associated costs and litigation, which together reduced net profit before tax by $3,008m..

The provisions and costs related to the Australian Transaction Reports and Analysis Centre’s (AUSTRAC) civil proceedings against Westpac in relation to alleged contraventions of the Anti-Money Laundering and Counter-Terrorism Financing Act.

These civil proceedings contributed to board and management changes and led to a provision for a potential penalty along with additional costs, including from the group’s Response Plan.

 In aggregate, these costs reduced cash earnings in First Half 2020 by over $1 billion.

 Secondly, the financial services sector, including Westpac, has continued to respond to the recommendations from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry

Impairment charges were $1,905m higher compared to First Half 2019 reflecting the rapid deterioration in the economy as a result of the COVID-19 pandemic which has led to a significant increase in the expected credit losses the group has estimated under AASB9.

Westpac states, “Asset quality was sound, with stressed exposures as a percentage of total committed exposures at 1.32%, up 22 basis points compared to First Half 2019.

“Given that COVID-19’s economic impact only escalated in March 2020, these metrics do not fully reflect the more challenging position beginning to emerge across the economy and its impact on customers.”


Share this article

Rate this article


Subscribe to comments feed Comments (0 posted):

Log in