Westpac says that it its first-half earnings will be reduced by $357 million as it compensates customers wronged in the fees-for-no-service scandal.
It's the latest blow to the big banks as three of the four of them embark on what is expected to be a "messy" round of first-half earnings over the next few days.
Analysts are tipping lenders to try block out the "large and lumpy" items associated with years of wrongdoing by focusing on underlying operations.
"Expect another messy set of numbers by the banks given the impact of asset divestments, remediation charges and Royal Commission expenses in both this half and prior periods," UBS said in a note.
Commonwealth Bank, which operates on a different calendar to its big four rivals, in February reported a 2.1 per cent decline in cash profit to $4.676 billion, weighed down by slowing property markets, tighter lending, and costs from Kenneth Hayne's inquiry.
Similar headwinds are anticipated for ANZ when it reports on Wednesday, with NAB and Westpac to follow on Thursday and Monday respectively.
UBS said ANZ, which had flagged $421 million in remediation as of September, is the leader when it comes to improving its expense verification and should report a "cleaner" first-half cash profit of $3.32 billion.
That would be down about five per cent on $3.5 billion a year ago.
ANZ's interim dividend is expected to remain flat at 80 cents per share.
NAB, which could be reporting its last result before it appoints a permanent chief executive to replace the departed Andrew Thorburn, this month flagged an extra $525 million after-tax hit through new customer remediation costs - bringing total charges to $1.1 billion as of March 31.
The bank is also tipped to cut its interim dividend, which would cap a horror six months where it was singled out for special treatment in the Hayne report, leading to the resignation of Mr Thorburn and chairman Ken Henry in February.
UBS expects Westpac to report a first-half cash profit of $3.29 billion, which would be down 22 per cent on a year ago.
Westpac said late on Tuesday that the final cost of remediation wasn't yet known and wouldn't be until all payments were made.
"While it is disappointing that we have needed to make these provisions, I said at the end of last year that our priority was to deal with any outstanding issues and process payments as quickly as possible," Westpac chief executive Brian Hartzer said.
