ANZ shares plunge 2.6%

ANZ shares have taken their steepest one-day fall in more than eight months after the group warned it would take a painful full-year results hit.

And shares in its major rivals have also slipped after the banking heavyweight flagged more than $800 million in impairments and other one-off expenses, intensifying the pall over the sector.

In a trading update yesterday, ANZ said it would take an $824 million hit to its full-year profit when it releases its results late this month. Of that sum, $421 million is the cost for “remediation” – or compensation – for customers who have been victims of misconduct or mistakes at the bank.

ANZ is among financial companies ensnared in the widespread “fees for no service” scandal, where customers have been charged fees for services they never received.

In a statement yesterday, the bank said it was compensating customers who received “inappropriate advice” or who paid for services they did not receive.

The bank said it was also compensating customers “for issues arising from product reviews”, but the statement did not clarify which products.

Of the $421 million, $240 million is going to customers and $181 million was spent by the bank spent finding out which customers were affected by poor practices.

The bank, led by chief executive Shayne Elliott, said efforts to repay customers might not be complete.

“These (costs) relate to issues that have been identified from reviews to date,” it said in a statement. “These reviews remain ongoing.”

Its shares fell 2.6 per cent yesterday in their biggest single-session slide since February. The slide wiped more than $2 billion from the group’s market value, cutting it to $77.6 billion.

Shares in the other big banks also fell yesterday, between 0.9 per cent and 1.3 per cent.

ANZ is scheduled to announce its full-year results on October 31. Among other oneoff costs flagged by ANZ yesterday, it is also taking a $38 million hit for costs associated with the financial services royal commission.

The bank is writing down the value of some software assets, mostly linked to its international business.

It says a $206 million “accelerated” software amortisation expense — essentially the cost for ageing software — will be recorded in the secondhalf of this year.

“This follows a recent review of the international business along with a number of divestments announced or completed this year,” the banks aid. It is also taking a $159 million hit for “restructuring” costs, which include expenses linked to redundancies in its move to be a more “agile” workplace.

The impairments and other one-off expenses flagged yesterday will be weighted toward the group’s second half — the six months to September — at $711 million.

In a report for investors, UBS analysts said it marked a “welcome” clean-up of the books at ANZ.

But they warned more charges could come.