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Banking royal commission: National Australia Bank to take profit hit with $314m compensation fund

16 Oct 2018 - National Australia Bank (ASX:NAB) today announced additional costs of $314 million after tax in connection with its customer remediation program. 16 Oct 2018 - National Australia Bank (ASX:NAB) today announced additional costs of $314 million after tax in connection with its customer remediation program.

National Australia Bank is setting aside $314 million for customer remediation programs, becoming the latest big bank to take a big profit hit due to compensation.

NAB says second-half cash earnings — the banks’ preferred measure of profitability — will take a $261 million hit from refunds and compensation for issues including adviser service fees and plan service fees.

The remaining $53 million is related to discontinued operations.

The charges will be the last for NAB in the 2018 financial year, the results of which will be reported on November 1, but the lender says there could be more to come as customer remediation programs continue into FY19.

“Where we have let customers down, we are determined to put things right,” NAB chief executive Andrew Thorburn said in a statement.

“We have made good progress in resolving a number of issues that impacted our customers and we want to compensate them as quickly as possible.”

About 69 per cent of the cash earnings hit will affect revenue, with the remainder reported in expenses.

NAB already said in its third-quarter trading update that the costs are excluded from full-year expense growth guidance of between 5 per cent and 8 per cent.

Costs associated with responding to the royal commission are not included.

Rival ANZ last week outlined $421 million in remediation costs, while Westpac has set aside $235 million and is tipped to make more.

Commonwealth Bank, which is on a different reporting calender to its major rivals and has already announced its 2018 results, last week launched a remediation program for deceased estates.

This article was first published by https://thewest.com.au/
Author: Stuart Condie AAP
Last modified onWednesday, 17 October 2018 22:34

1 comment

  • John Glare
    John Glare Friday, 19 October 2018 05:02 Comment Link

    Does this include the £2.5 bn interest charged to UK customers locked in to fixed rate Tailored Business Loans by fabricated break costs?
    John Glare
    NAB Customer Support Group

    Report

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