SYDNEY: Australia’s Westpac Banking Corp says it will take a one-off charge of A$1.3bil (US$956mil or RM3.99bil) against its second-half profit after its institutional banking unit quit energy trading, among other reasons.

       The country’s second-largest lender by market capitalisation also lowered its earnings outlook, citing “subdued” financial markets.

       Westpac said the one-off charge included provisions to pay out customers seeking remediation for wrongly charged fees, and costs associated with the sale of its life insurance unit.

       The company cut the value of its Westpac Institutional Banking (WIB) unit by nearly A$1bil (RM3.06bil).

       This was after “reducing risk in the division through the exit of energy trading, consolidating our Asian operations and reducing our correspondent banking relationships which have all impacted earnings”, it said in a securities filing.

       “At the same time, medium-term expectations of a prolonged low interest rate environment, subdued financial markets income and elevated compliance expenses have impacted WIB’s earnings outlook,” the bank added.

       Payouts and other costs associated with settling customer lawsuits would add another A$172mil (RM527mil) to the one-off charges, while selling costs and tax adjustments linked to the sale of its life insurance unit would add A$267mil (RM818mil) to the one-off items.

       The bank is scheduled to report annual results on Nov 1.

       It is expected to post a cash profit of A$6.5bil (RM19.91bil), according to the average forecast of 13 analysts polled by Refinitiv before the charges were announced, nearly triple the previous year’s result which was impacted by Covid-19 loan repayment freezes and other macroeconomic shocks. ― Reuters