The Westpac Banking Corp (ASX: WBC) share price will be in focus this morning after the lender flagged that "cash earnings" for the first half of fiscal 2019 will take a $260 million hit due to remediation costs and associated customer refunds.
The bank reports that refunds are mainly for customers charged unfair ongoing advice fees by certain financial planners, for retail or business customers that had interest only loans the did not automatically switch to principal and interest when required, and business customers provided incorrect loans.
The $260 million cost is tiny compared to the bank's first half cash profit of $4,251 million in fiscal 2018, although there's the possibility more costs are booked over the second half to mean total costs start to have a more material impact.
Through fiscal 2017 and fiscal 2018 total remediation costs of $118 million and $281 million respectively were booked, which means the Royal Commission year of fiscal 2019 is already shaping up to be its costliest yet.
Other big banks such as as the Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank Ltd (ASX: NAB) have also told shareholders to expect more compliance costs as a result of the regulatory problems.
