Notable items affecting Westpac's Second Half 2021 (2H21) to reduce profit by $1.3bn
Westpac today announced that its reported net profit and cash earnings in 2H21 will be reduced by $1.3 billion (after tax) due to notable items. The notable items after tax include:
a $965m write-down of assets (goodwill, capitalised software and certain other assets) in Westpac Institutional Bank (WIB) following their annual impairment test;
additional provisions for customer refunds, payments, associated costs, and litigation provisions of $172m;
previously announced separation and transaction costs along with a deferred tax asset write-off related to the agreed sale of Westpac Life Insurance Services Limited (WLIS) of $267m1; and
other costs associated with the divestment of the Group's Specialist Businesses of $24m.
These charges were partly offset by:
a gain on sale of Westpac General Insurance, $55m; and
a reversal of the previous write-downs associated with Westpac Pacific as the business is no longer held for sale, $54m.
In aggregate these items are estimated to reduce the Group's CET1 capital ratio by around 15 basis points2, noting that the write-down of goodwill and capitalised software has no net impact on regulatory capital as they are already capital deductions.
Details of notable items in Second Half 2021 are in Appendix 1 and a summary of line item impacts is in Appendix 2. A more detailed breakdown of these notable items, including additional Non-interest income and Expense details, will be provided with our Full Year 2021 results.
Changes to information in Westpac's 2021 Full Year Financial Results
In First Half 2021 we introduced a "Held for sale" designation for businesses under sale agreements. In Second Half 2021 the following businesses (previously in Held for sale) were sold and are not included in 'Held for sale' after their sale date:
Westpac General Insurance; and
Westpac Lenders Mortgage Insurance.
In addition, Westpac Pacific is no longer in Held for sale following Westpac's announcement on 22 September 2021 that the sale to Kina Securities Limited would no longer proceed.
This compares to the post tax loss of c.$0.3bn for FY21 disclosed on 9/8/21. A further loss on sale is expected to be recorded in FY22 when the sale of WLIS is completed. 2 At June 30 2021.
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Following announced sales through Second Half 2021, the following businesses will now be presented under the "Held for sale" designation:
Westpac Life Insurance Services Limited;
Westpac Life-NZ-Limited; and
Motor vehicle dealer finance and novated leasing.
In Section 5 of the Full Year 2021 Results we will expand our disclosure to outline the cash earnings contribution of businesses sold and currently Held for sale in Financial Year 2021.
There has been no change to our segment reporting.
We are scheduled to announce our Full Year 2021 results on Monday, 1 November 2021.
For further information:
Group Head of Media Relations
Head of Investor Relations
0419 683 411
0438 284 863
This document has been authorised for release by Tim Hartin, General Manager & Company Secretary.
Westpac Banking Corporation published this content on 11 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 11 October 2021 22:31:01 UTC.