The reasons for Westpac exiting its wealth management business were laid bare on the company’s balance sheet when it released its full-year results to the Australian Securities Exchange (ASX) on Monday.
The company’s detailed analysis of its operations painted a gloomy picture, even with respect to those elements of the wealth business Westpac retained – the insurance and platforms business.
The analysis showed that net wealth management and insurance income decreased by $994 million or 49% compared to 2018, impacted by additional provisions for notable items mostly related to financial planning of $531 million.
However, it said that excluding notable items, net wealth management and insurance income was down $463 million or 23% mainly due to:
- No contribution from Hastings, following exit of the business in full year 2018 (down $203 million);
- Insurance income decreased $116 million (general insurance down $69 million, life insurance down $39 million);
- Lower platforms and superannuation income (down $98 million) primarily driven by margin compression from full year impact of platform repricing, implementation of regulatory reforms (Protecting Your Super), product mix changes and outflows in legacy platforms; and
- Cessation of grandfathered commission payments (down $42 million).
The banking group said the lower platforms and superannuation income had been partly offset by an 89% increase in BT Panorama funds to $23 billion due to inflows and higher asset markets.