Westpac flags A$1.3b profit hit led by institutional bank impairment

[SYDNEY] Australia's Westpac Banking Corp said on Tuesday it will take A$1.3 billion (S$1.3 billion) of one-off charges against its second-half profit after its institutional banking unit quit energy trading and lowered its outlook due to "subdued" financial markets.

The country's second-largest lender by market capitalisation said the one-off charges also included provisions to pay out customers seeking remediation for wrongly-charged fees, and costs associated with the sale of its life insurance unit.

In a market filing, the company said it cut the value of its Westpac Institutional Banking unit by nearly A$1 billion because of "reducing risk in the division through the exit of energy trading, consolidating our Asian operations and reducing our correspondent banking relationships which have all impacted earnings".

"At the same time, medium term expectations of a prolonged low interest rate environment, subdued financial markets income and elevated compliance expenses have impacted WIB's earnings outlook," the bank added.

REUTERS