Wealth-related matters are responsible 91 per cent of the $525 million in additional after tax costs the bank will incur for its remediation program.
In a trading update this morning, NAB said the additional expense is expected to reduce 1H19 cash earnings by an estimated $325 million and earnings from discontinued operations by an estimated $200 million.
“We are putting things right where we have treated our customers poorly and making sure that they are compensated more quickly. Since June 2018, we have made approximately 360,000 payments to customers with a total value of approximately $145 million,” NAB chief executive Philip Chronican said.
“There are currently around 350 people dedicated to remediating customers and we will soon have around 500 across NAB as we bring greater focus and discipline to resolving issues and making sure they do not happen again.”
Of the 1H19 charges, about 91 per cent, or $478 million, are for wealth related matters, with the remainder for banking.
In combination with provisions raised in 2H18, which have not yet been utilised, this brings total provisions for customer-related remediation at 31 March 2019 to $1,102 million.
The key items giving rise to increased costs for customer-related remediation include:
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