Westpac joined the ranks of regional banks taking a hit to its wealth management business.

The Australian bank reported Monday its wealth management income took a hit in the fiscal first half. Westpac said its net wealth management and insurance income dropped 33 percent in the six months ended 31 March from the year-earlier six-month period, coming in at A$401 million (US$281.08 million). Total non-interest income for the six-month period was A$1.93 billion, down 17 percent from the year-ago period, according to Westpac’s filings to ASX.

Banks globally have seen their earnings dented in the first quarter due to market volatility over the January-to-March period – driven by Russia’s invasion of Ukraine and higher interest rates. 

Interest Rate Hit

For Westpac, net wealth management and insurance income was hit by lower life insurance income on the revaluation of life insurance policies due to movements in long-term interest rates, the filing said.

In addition, wealth income was also hurt by migrating customers from legacy platforms to the lower-fee Panorama platform, Westpac said. Panorama is Westpac’s wealth management platform; according to media reports, Westpac is seeking bids for the platform as it moves to exit wealth management and other businesses. «Bloomberg» reported in March that the platform was hit by outages last year.

Group funds were at A$238.8 billion at the end of March, up 5 percent from 31 March 2021, as outflows of A$21.3 billion were offset by inflows of A$19.5 billion, Westpac said. Group funds includes superannuation – or Australia’s retirement savings program – and non-superannuation products, as well as wealth products, Westpac said. Compared with the end of September, group funds were down 2 percent, mainly on market movements, the filing said.

Remediation Costs Fall

Westpac said its fiscal first half remediation costs fell to A$156 million, helping to support non-interest income; since 2017, the bank has paid more than A$1.85 billion in remediation, the filing said. The bank has needed to pay remediation to customers for a variety of lapses, many highlighted by Australia’s Royal Commission investigation into the sector. Those lapses included charging fees to deceased customers, issuing and charging customers for duplicate insurance policies and failing to properly disclose fees.

Westpac reported its net profit for the six-month period was A$3.28 billion, down 5 percent from the year-ago period.