National Australia Bank Ltd’s [ASX:NAB] share price lifted slightly this morning, gaining 25 cents shortly upon opening. At time of writing, NAB shares are trading at $25.75.
Despite this slight pull back, NAB’s shares are still down 21.68% since 1 November 2017.
On Tuesday morning, the bank announced $314 million of additional costs related to its customer remediation program, following the fee for no service scandal and the recent royal commission.
What are the additional costs for?
The additional costs relate to several customer remediation matters. This includes refunds and compensation to customers, costs for implementing remediation processes and costs associated with regulatory compliance matters.
The additional costs will reduce cash earnings in the second half of 2018 by around $261 million. And earnings from discontinued operations by approximately $53 million.
Only 69% of these costs will affect revenue, with the balance reported in expenses.
Chief Executive Officer of NAB, Andrew Thorburn said:
‘Where we have let customers down we are determined to put things right. We have made good progress in resolving a number of issues that impacted our customers and we want to compensate them as quickly as possible.’
The customer remediation programs are expected to continue into the 2019 financial year, with potential further costs.
Only time will tell if this program will pay off for NAB, but for now it looks like they still have some tough times ahead.
For Money Morning
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