"Westpac today announced expected new and increased provisions, excluding impairment provisions and asset write-downs totalling around $1,430 million after tax which will reduce first half 2020 (1H20) cash earnings," the business said.
Statutory net profit after tax will also be cut, according to the announcement from Westpac chief executive Peter King.
Westpac was now also doing a detailed analysis to finalise its impairment provisions for its first half.
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That is expected to include a significant collective provision increase that will lift the group's total provision balance for credit losses expected from the Covid-19 outbreak.
Legal proceedings launched last year by financial intelligence agency AUSTRAC are the main driver of the provisions announced today. The bank said it would set aside A$1.03 billion for costs associated with the case, which it has said it intends to settle, flagging "provisions and costs associated with the AUSTRAC proceedings and response plan of A$1,030 million after tax".
More will come early next month.
"Westpac plans to update the market once this impairment charge has been finalised and prior to the announcement of its 1H20 results on May 4," it said.
Westpac said it expects to report lower cash earnings from its first half which will be taken into account when considering dividends.
A decision on dividends will be made by the board in finalising group accounts, it said.
Westpac shares are today trading on the ASX around A$15.96, down from A$25.81 in late February.
• Covid19.govt.nz: The Government's official Covid-19 advisory website
