Here’s a great little drop from the National Australia Bank on Easter Thursday as Australian investors and markets were more focused on four-day break, Easter buns and eggs and getting back in touch with family and friends after a rough first three and a bit months of the year.
The NAB revealed on Thursday that it will take a $525 million hit from a new round of customer remediation costs, as it compensates people who were overcharged, sold dud insurance or given poor financial advice.
The charges are worth $749 million before tax (yes taxpayers will contribute $224 million to the NAB and its shareholders). These new costs take the total bill so far for the bank to $1.1 billion.
The NAB said its half-year profits next month would be reduced by $325 million as a result of the charges, while the remaining $200 million related to discontinued operations.
NAB’s CEO Philip Chronican said the bank has made approximately 360,000 payments to customers with a total value of approximately $145 million. That means close to $900 million remains to be paid out.
“We are putting things right where we have treated our customers poorly and making sure that they are compensated more quickly,” Mr. Chronican said in the statement last Thursday.
“There are currently around 350 people dedicated to remediating customers and we will soon have 500 across NAB as we bring greater focus and discipline to resolving issues and making sure they don’t happen again.”
It said 91% of the $325 million in first-half charges related to its wealth division.
It’s all in the timing and once again shows that the banks have not learned anything from the royal commission. Publicity will be brief over the Easter holidays.
The NAB is due to report its 2018-19 interim results on May 2. The shares rose 0.2% to $25.27. They jumped 3.4% last week and are up 5% so far this year thanks to that strong rise last week.
