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  • Westpac Banking Corporation (WBC) is expecting to suffer a massive $1.4 billion hit to its first-half earnings
  • Australia’s second-largest bank expects a $900 million penalty will come from the AUSTRAC money laundering scandal
  • On top of that, a further $130 million has been earmarked to cover additional costs as the bank implements its response plan
  • Westpac Chief Executive Peter King said 200 people had been hired to prevent financial crime while a clearer accountability regime is set up
  • The major bank also reported its statutory net profit after tax would also be reduced by the impairments, which do not include losses from the coronavirus pandemic
  • Westpac is down slightly on the market this afternoon, trading for $15.94 per share

Westpac Banking Corporation (WBC) is expecting to suffer a massive $1.4 billion hit to its first-half earnings.

Australia’s second-largest bank expects a $900 million penalty will come from the AUSTRAC money laundering scandal.

The figure overtakes the record $700 million fine Commonwealth Bank copped in 2018 for breaching AUSTRAC laws.

Westpac is accused of 23 million breaches of anti-money laundering laws.

On top of that, a further $130 million has been earmarked to cover additional costs as the bank implements its response plan.

Westpac Chief Executive Peter King said 200 people had been hired to prevent financial crime while a clearer accountability regime is set up.

The major bank also warned its statutory net profit after tax would also be reduced by the impairments, which do not include losses from the coronavirus pandemic.

It plans to update the market on expected COVID-19 loan losses before its interim earnings results next month.

With many Australians left unemployed, Westpac is expecting customers may not be able to repay loans.

“These items, and the likelihood of a higher impairment charge, mean that Westpac
expects to report lower cash earnings in the first half of 2020, which will be taken into account when considering dividends,” Peter said.

“A decision on first-half of 2020 dividends will be made by the Board as part of finalising the Group’s accounts and is expected to be announced with Westpac’s first-half results,” he added.

Westpac is down slightly on the market this afternoon, trading for $15.94 per share at 2:07 pm AEST.

WBC by the numbers
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