At time of writing, the share price of Westpac Banking Corporation [ASX:WBC] is down 1.51%, trading at $26.11.
The Hayne Royal Commission has taken its toll on Westpac’s share price, which have recovered somewhat since February after the release of the Final Report:
The latest news out of Westpac is that its cash earnings for 1H 2019 will be significantly reduced due to further work on its customer remediation programs.
Westpac share price reacts to guidance on cash earnings
Today, Westpac released an announcement indicating that cash earnings for H1 2019 would be reduced by an estimated $260 million as it pursues a ‘get it right put it right’ initiative.
They indicated that 90% of this money is related to issues from previous financial years, and that half of the provisions can be traced back to their financial advice business.
In a previous post, we discussed how Westpac was the last and latest of the Big Four to ditch their financial advice business.
The company is now in the process of relinquishing 28% of the fees it received for the work of its salaried financial planners.
There is the potential for the remediation bill to grow with the company still assessing the provisions it must make for its BT Financial Group operations.
Should you invest in Westpac shares?
While some investors may see the current Westpac share price as an opportunity to squeeze some value out of the stock, I have a suspicion that Westpac shares will underperform over the next few months.
The Big Four are like oil tankers and it will take some time before than can be steered into calmer, more profitable waters.
I wrote previously about my hunch that dividends for the Big Four will be shaved, and would highly recommend you examine this free report by our income expert if you are interested in dividend stocks.
Some of the stocks Matt Hibbard discusses may surprise you.
For Money Morning