The Australia and New Zealand Banking Group's logo reflects in a glass panel in downtown Sydney on May 1, 2018. Photo: AFP / Saeed Khan

Australia’s ANZ Bank said Tuesday its half-year cash profit would take a Aus$559 million ($376 million) hit as a result of reimbursing customers for unfair fees and dodgy financial advice.

The bank, one of Australia’s four largest financial institutions, has now set aside a total of Aus$1.1 billion in remediation costs in the 2018 and 2019 financial years.

ANZ chief financial officer Michelle Jablko said the bank recognized “the impact this has on both customers and shareholders” and had a team of more than 500 staff working to quickly reimburse customers.

Although a fraction of revenue, Australia’s biggest banks are beginning to feel the impact of such repayments on their bottom lines.

ANZ’s announcement came just days after one of its competitors, National Australia Bank (NAB), said it was setting aside an additional Aus$832 million to repay customers, bringing its total bill above $2 billion.

A Royal Commission that ended in February exposed rampant malpractice across the Australian banking sector, one of the world’s most profitable.

It found banks had charged fees to dead people, charged fees for no services at all, used aggressive selling tactics and provided poor advice that led to significant financial upheaval for clients.

The year-long investigation singled out NAB for especially harsh criticism, forcing the departure of the firm’s CEO and chairman.

Commonwealth Bank and Westpac have also taken steps to refund customers.

The total cost for the sector could be as much as Aus$6 billion, according to a Macquarie Research estimate.

AFP

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