UPDATE 1-National Australia Bank flags $775 mln hit to H1 earnings

(Reuters) – National Australia Bank Ltd (NAB.AX) said on Monday provisions for customer remediation and changes to a software capitalisation policy were expected to reduce its first-half earnings by A$1.22 billion ($775 million).

Australia’s No. 3 lender expects customer-related remediation charges of A$268 million before tax for the period, which in turn is likely to reduce its common equity tier 1 capital ratio by about 6 basis points.

The bulk of the charges relate to additional provisions for matters that emerged after Australia’s securities regulator last year accused the bank of charging customers “fees for no service” and as the company self-reported anti-money laundering shortcomings.

A change to the application of NAB’s software capitalisation policy will also reduce earnings by A$742 million after tax, and the bank also expects the carrying value of its 20% stake in life insurer MLC Life to be impaired by A$214 million.

Fellow ‘Big Four’ bank Westpac (WBC.AX) said last week it expects a A$900 million fine over accusations it enabled millions of illegal payments including between known child sex offenders, another scandal that emerged last year as part of the industry review.

Reporting by Rashmi Ashok and Shashwat Awasthi in Bengaluru; Editing by Peter Cooney and Lincoln Feast.