NAB cops new $1.18bn remediation hit

National Australia Bank will cop a $1.18 billion hit in its full-year results including an extra $832 million in customer remediation costs related to dodgy advice and insurance.

The big four lender said the provisions – which also include $348 million related to software changes – are expected to reduce second-half cash earnings by an estimated $1.12 billion after tax, with the bank’s remediation bill now at $2.09 billion after it was dragged over the coals at the Hayne inquiry.

The key remediation provisions cover adviser service fees charged by NAB advice partnerships between 2009 and 2018, consumer credit insurance sales through certain NAB channels, non-compliant advice provided to wealth customers, and adviser service fees charged by NAB Financial Planning.

The bank had previously noted additional customer-related remediation provisions were expected in 2H19, but NAB interim chief executive Philip Chronican said on Wednesday the size of the provisions were significant.

“We understand that shareholders will be rightly disappointed. However, we also recognise the need to prioritise dealing with these past issues and fixing them for customers,” Mr Chronican said.

NAB also said changes to current and future software capitalisation balances, necessitated by a review, is expected to reduce its capitalised software balance by $494 million at September 30, and reduce the bank’s 2H19 cash earnings by $348 million.

Shares in the bank fell 3.1 per cent to a three-week low of $28.78 on the announcement.

AAP

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