Morningstar says ANZ’s latest profit downgrade confirms the bad situation the majors have found themselves in as a result of the Hayne royal commission.
In a research note on Monday (8 October), Morningstar banking analyst David Ellis commented on ANZ’s confirmation of a $711 after tax increase in customer refunds, remediation costs and amortisation.
“The ANZ Bank update confirms the current sorry state-of-affairs facing major banks, particularly around customer trust,” Mr Ellis said.
“The royal commission has forced the banks and other financial service firms to publicly admit to a litany of very poor customer outcomes, with the focus on the baking oligopoly’s disappointing track record for proactive identification and correction of errors and commissions during and up to the past decade.”
Mr Ellis noted that under the scrutiny of the Hayne inquiry, the behaviour of the big four banks towards customer remediation has been found wanting, leading to a series of expensive customer compensation announcements.
The increase in ANZ’s provision, charges and remediation costs follows Westpac’s $235 million hit announced late last month.
“We would not be surprised to see NAB announce a similar charge before the bank reports fiscal 2018 results on 1 November 2018,” Mr Ellis said.
ANZ is scheduled to report fiscal 2018 earnings on 31 October.