Australia's Westpac flags $170 mln earnings hit from refunds, litigation
* Westpac says amount does not include some banking inquiry
* Bell Potter cuts Westpac's valuation by 3 pct to A$29.75
* Stockbroker downgrades shares to hold
(Adds pictures to media information)
Sept 27 (Reuters) - Westpac Banking Corp said on
Thursday its annual cash earnings will fall by about A$235
million ($169.9 million) on account of provisions for customer
refunds and litigation, amid damaging revelations from an
inquiry into the financial sector.
About two thirds of the impact is expected to be recorded as
negative revenue while the remainder will be recorded in costs,
Australia's second-largest lender said in a statement.
"It is disappointing some of our past practices have not
lived up to appropriate standards," said Chief Executive Brian
Westpac's shares closed down 0.7 percent.
Earlier this month, the bank agreed to pay a record A$35
million ($25.31 million) fine for wrongly approving thousands of
Westpac said costs associated with responding to the ongoing
Royal Commission, as the inquiry is called, were not included in
Bell Potter Securities cut its valuation of Westpac stock by
3 percent to A$29.75 from A$30.60 and downgraded its
recommendation to 'hold' on expectations of cash earnings
falling 3 percent this year and 1 percent in 2019.
"Because potential costs associated with responding to the
Royal Commission and work in respect of other advice fees are
not included in the charge, we feel a Hold rating ... is more
prudent this time."
Westpac said reviews that include potential further costs
related to advice fees charged by aligned planners would
continue into 2019.
The bank is scheduled to report full-year earnings on Nov.
($1 = 1.3827 Australian dollars)
(Reporting by Aditya Soni in BENGALURU; Additional reporting by
Paulina Duran in SYDNEY and Melanie Burton in MELBOURNE; Editing
by Stephen Coates and Christopher Cushing)
First Published: 2018-09-27 11:24:57
Updated 2018-09-27 11:56:49
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