Zip sale partly offsets Westpac costs as it flags $1.2 billion in write-downs

  • By AB+F Editorial

Westpac flagged $1.2 billion in write-downs which will impact its full year results including a $55 million in reduced cash earnings from asset sales and revaluations. 

The bank will deliver its full year results on the 2nd of November. 

The bank said that its cash earnings for that period will be reduced by $1.2 billion due to a number of costs associated with regulation, customer refunds and asset sales and revaluations. 

Westpac expects the impact from the revaluation of Life insurance liabilities and a loss on the agreed sale of its vendor finance business to total $267 million, which will be partly offset by a benefit after tax of $212 million from a revaluation of the bank’s holding buy now, pay later business Zip. 

The bank also lifted provisioning for costs associated with AUSTRAC proceedings to $415 million after tax. This includes the previously announced $404 million in provisions. 

The bank also announced $182 million in costs for customer refunds, repayments, associated costs, and litigation provisions. 

Other costs include $568 million in the write-down of goodwill and intangibles associated with Westpac Life Insurance Services and its auto finance business along with a write-down of capitalised software. 

The bank said these costs will reduce the group’s CET1 capital ratio by 24 basis points, noting that some items have no impact on capital as they are already capital deductions.

“Although these were broadly in-line with our expectations, we had accounted for them 'below-the-line' within statutory profit,” UBS bank analyst Jon Mott said in a client note. 

As a result, UBS has reduced its cash earnings per share forecast by 20 per cent. 

National Australia Bank also recently flagged additional costs to its second half profit including a further $450 million in wealth and employee provisions, and property impairments