In a statement issued on the Australian Securities Exchange (ASX), the bank noted it increased the software capitalisation threshold before a project from AU$1 million to AU$20 million.
“This policy has been applied from 1 October 2020 and will see the group expense a higher portion of its investment spending from first half 2021,” Westpac said.
“The higher expense is not treated as a notable item.
“This change had no impact to the carrying value of capitalised software at 30 September 2020.”
Westpac also announced it would write-down the value of capitalised software and other intangible assets to around AU$115 million. This will partially result in a AU$282 million impact on the bank’s cash earnings after tax for the 1H21, it said.
Other items impacting the bank include AU$220 million in customer refunds, litigation provisions, and payments associated costs, as well as AU$56 million in costs associated with ending the group’s relationship with IOOF.
According to the bank, the loss, however, will be partially offset by its investment gains in Coinbase, a San Francisco-based online platform for buying, selling, transferring, and storing digital currency, and Zip Co that are expected to deliver around AU$288 million and AU$18 million, respectively.
For the 2020 full year, Westpac reported a 66% profit drop posting AU$2.29 billion for 2020. Cash earnings came in at AU$2.6 billion, down AU$4.2 billion when compared to the same period last year.
Revenue dropped 2% to just over AU$20 billion.
At the time, the company attributed the profit drop to COVID-19 and its AU$1.3 billion fine for breaching the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) over 23 million times.
The Australian Transaction Reports and Analysis Centre (Austrac) came to an agreement with Westpac last September to settle the anti-money laundering and counter-terrorism financing allegations that were raised by the watchdog in November 2019.
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