ANZ'S full year profit takes heavy hit amidst inquiry fallout

The bank expects a $501m earnings blow.

Reuters reports that Australia and New Zealand Banking Group Ltd (ANZ) is expecting a $501m (AU$711m) hit to full-year profit due to higher costs after a sweeping inquiry laid bare systemic malpractice in the banking sector.

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Part of this earnings blow come in the form of a $263.6m (AU$374m) cut would be shed off as ANZ pledged to compensate remediate customers who received inappropriate financial advice or paid for services that did not materialise.

Australia’s Big Four banks which include Westpac, CBA and NAB are amongst the most profitable in the world, earning average net profit margins of 34 percent, data from Refinitiv show.

However, misconduct revealed during nine months of public hearings at an inquiry into financial sector misconduct has weighed heavily on the sector, and forced the banks to set aside cash to restructure their businesses, pay for legal costs, defend lawsuits, and compensate customers. Customer satisfaction at banks also crashed from 82.3% in January to 78.5% in May as part of the fallout. 

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Westpac earlier announced that its annual cash earnings would fall by around $166.18m (A$235m) on the back of provisions for customer funds and litigation.

Here’s more from Reuters: