Remediation programs “are taking longer to complete” and the costs are piling up for Westpac, the bank disclosed yesterday in a preview of the bad news that will drag on its March 2021 half-year result.

Westpac said its cash first half earnings will be reduced by A$282 million after tax “due to notable items”.

The most prominent item is “additional provisions for customer refunds, payments, associated costs, and litigation provisions of $220 million”.

This includes $113 million in provisions for additional costs “as some programs are taking longer to complete”, the bank said.

A $199 million decrease in non-interest income from additional provisions “mostly related to aligned and salaried advisor remediation following the completion of further reviews and an increase in time value of money assumptions, and customers on our platforms who were not advised of certain corporate actions following the completion of further reviews and an increase in time value of money assumptions.”

The bank has also incurred a write-down of goodwill in the group’s Lenders Mortgage Insurance business “as it is now held for sale”.

The $84 million expense impact was disclosed in its first quarter update in February 2021.

And in a measure of the bank’s technology challenges, “following a review of the Group’s capitalised software”, $165 million has been written off as an expense.

Westpac has also changed its software capitalisation policy, increasing the threshold before a project is capitalised to $20 million (previously $1 million).