Westpac has pledged to stay committed to key areas of the wealth management sector, such as by providing insurance and investment platforms, in contrast to its major rivals which have backed away from wealth after a run of scandals.
Westpac has reported a flat full-year profit of A$8.07bn as customer compensation and legal costs reined in performance. The results showed big declines in second-half profits in wealth and retail banking.
The bank’s wealth management arm, BT Financial Group (Australia), has posted cash earnings of A$645m ($464.3m) for the year ended 30 September 2018, a fall of 12% compared to A$736 ($529.9m) in the previous year.
Australia’s second-largest lender, which had been tipped to slightly beat last year’s performance, set aside a previously announced A$281m for customer remediation and associated costs related to issues of the type heard by the financial services royal commission.
The provision falls short of the A$421m and $360m made by rivals ANZ and NAB, and chief executive Brian Hartzer seemed to confirm analysts’ belief that costs from the royal commission may continue to bite.
“We’re committed to running our business in a way that meets standards from customers and the community and we’ll continue to look to improve things,” Hartzer said. “I’d like to say we’re largely through it but it is possible there may be other issues.”
Nonetheless, Westpac acknowledged that the royal commission was performing an important service. “The royal commission has been a valuable and rigorous process,” the bank said in a statement.
“The stories and examples of poor behaviour affecting customers that have come to light are confronting and have understandably impacted the public’s trust in the industry.”
Westpac is the only lender of the big four that remains fully committed to the wealth management sector, with its rivals selling off most of their wealth businesses.