NAB’s fix-it fund rises to $1.1 billion
NATIONAL Australia Bank’s bill to compensate customers who were given poor financial advice, sold junk credit card insurance or overcharged for services has hit $1.1 billion.
The latest rise in compensation costs at the banking giant came as the corporate cop charged one of its former financial planners with fraud over allegations he stole more than $165,000 from clients.
NAB yesterday warned investors to brace for an extra $749 million in before-tax charges linked to its customer remediation program when it releases its half-year results next month.
The latest provision, which covers customer compensation and the cost of running the remediation program, weighs in at $525 million after tax.
It will wipe an estimated $325 million from NAB’s profit for the six months to March due out on May 2.
Earnings from discontinued operations will be cut by an estimated $200 million, the banking giant said yesterday.
Its discontinued operation include its wealth management business MLC which it is looking to divest.
The latest charges take NAB’s after-tax bill for customer remediation to $1.1 billion.
Chief executive Philip Chronican said the bank was cleaning up its past mistakes.
“We are putting things right where we have treated our customers poorly and making sure that they are compensated more quickly,” he said.
Mr Chronican said NAB had made about 360,000 payments to customers with a total value of approximately $145 million since June 2018.
“There are currently around 350 people dedicated to remediating customers and we will soon have around 500 across NAB as we bring greater discipline to resolving issues and making sure they do not happen again,” he said.
The customer remediation, which all big banks have been undertaking to address issues including those heard by the financial services royal commission, remain subject to a review by auditors.
Of the latest charges, more than 90 per cent are for wealth related matters.
NAB closed up 0.1 per cent yesterday at $25.27.