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Aussie Bank Crackdown Takes Its Toll On ANZ Profits

Profits for Australia and New Zealand Banking Group (ANZ) have taken a hit as the nation continues its crackdown on bank misconduct, reports in Reuters said Monday (Oct. 8).

ANZ announced its profits would take a $501 million hit as a result of costs related to the bank crackdown, which led regulators to require the bank to compensate some customers after ANZ was found to have charged clients for services not provided and inappropriate advice, reports said. ANZ’s warning came just weeks before it releases its full-year results, which led to the bank’s shares dropping by more than 2 percent.

The financial institution (FI) is the nation’s third-largest bank and one of the most profitable in the world, according to reports. Citing data from Refinitiv, Reuters said ANZ’s average net profit margins are at 34 percent.

Regulators have been probing ANZ and the rest of the Big Four banks for misconduct, forcing banks to allocate funds to compensate clients affected and to pay for legal costs. The government set up a Royal Commission to investigate the banking sector, releasing an interim report last month outlining a range of misconduct by several banks. The Commission is expected to publish its full report in February.

ANZ plans to allocate $263.6 million to compensate clients affected by the inappropriate advice and service-not-rendered. CLSA Equity Analyst Brian Johnson told the publication that ANZ’s announcement is not a surprise.

“Everyone else is announcing remediation charges, so ANZ was always going to do that,” said Johnson. “And if you are going to report a lower result, you might as well get a few other things in there.”

ANZ said it also plans to write down $145.8 million in software assets, plus a restructuring charge, totaling a second-half profit impact of $503.26 million, reports said.

Earlier this year, ANZ announced plans to repay $8 billion to small business customers of its commercial card services, after the Australian Securities and Investment Commission (ASIC) found the bank had failed to properly disclose fees and interest charges.

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