Westpac will take a $2.23 billion impairment charge, of which $1.6 billion stems from the decline in economic activity related to the COVID-19 pandemic.
However, the bank believes it is “well positioned to absorb this increase”.
“The world is going through a once-in-a-life-time health and economic crisis and we are committed to assisting as many customers as possible to bridge this shutdown period,” said new CEO Peter King. “Our packages are already providing relief to individual and business customers. It is however unfortunate that some customers will not be able to navigate the financial and economic changes of this crisis and may not reopen.
“Having materially strengthened capital over the last decade, building significant buffers, we are well positioned to absorb this increase and respond to future developments in the environment.”
While the bank’s impairment provisions have begun to increase, the extent of additional charges will depend on the “severity and duration” of the decline in economic activity.
“The group will reassess its provisioning levels as developments unfold,” Westpac said in a statement.
“What is impairment charge ?” What a dumb question. Who made you lot financial advisers ? I thought this page is only frequented by financial advisors.
….and trolls.
…and Dealer Group clowns, and hopeless Bank employees and “Consultants”, and Feminist Advocates and Product Promoters posting “news” articles and Industry Fund people
What on earth is an “impairment charge”….?
Australian Accounting Standards require reporting entities to apply mandatory Accounting methods and principles when preparing Financial Statements – AASB 136 (the Accounting Standard that applies to the Impairment of Assets) advises that the objective of this standard is to: “ensure that its assets are carried at no more than their recoverable amount. An asset is carried at more than its recoverable amount if its carrying amount exceeds the amount to be recovered through use or sale of the asset. If this is the case, the asset is described as impaired and the Standard requires the entity to recognise an impairment loss.” In other words, if the reporting entity, say a bank, believes that a borrower who’s financial status has changed is likely to be unable to meet current/future loan repayments/conditions, the ‘value’ of that asset is likely to have changed, thus they need to adjust the value of that asset in their records to the amount that they believe that they can recover – this adjustment is an ‘impairment charge’.
Could have just said ‘Bad and Doubtful debts’. Woof!
No, ‘bad and doubtful debts’ are basic bookkeeping concepts that generally deal with trade receivables. Impairment affects all assets. The impairment requirements of AASB 9 (affects financial instruments) and AASB 136 (affects all other non-excluded assets) have specific requirements for the recognition, measurement, and presentation of certain assets dependant on how they are categorised with respect to the operations of the entity and other factors. The loan example was just to illustrate to Bob how an impairment charge would apply to a mortgage portfolio.
Impairment Charge is a professional way of saying ‘taking a big hit to profits’. They make obscene profits anyway AND give little interest to savers AND hike fees AND are opportunistic toward their clients. Just obscene entities. Purveyors of usury all.