More putting the trash out, before the results season.
NAB announced today additional costs of $314 million after tax in connection with its customer remediation programme. This will reduce 2H18 cash earnings by an estimated $261 million and earnings from discontinued operations by an estimated $53 million.
These matters include:
- refunds and compensation to customers impacted by the issues in NAB’s Wealth business, including advisor service fees, plan service fees, the Wealth advice review and other Wealth related issues
- costs for implementing remediation processes
- other costs associated with regulatory compliance matters
Of the cash earnings impact, approximately 69% of these costs will impact revenue, with the balance reported in expenses.
As outlined in the third quarter trading update, these additional costs will be excluded from the FY18 expense growth guidance of 5-8%. Costs associated with responding to the Royal Commission are not included in these additional charges.
NAB says it remains well positioned to meet APRA’s ‘unquestionably strong’ benchmark in an orderly manner by January 2020.
But they also said that these customer remediation programs are expected to continue into FY19, with potential for further costs, which remain uncertain at this point in time.
Further detail will be provided when NAB releases its 2018 Full Year results on 1 November 2018.
