Westpac wealth management arm, BT Financial Group (Australia), has posted cash earnings of A$645m ($464.3m) for the year ended 30 September 2018, a fall of 12% compared to A$736 ($529.9m) in the previous year.

The decrease in earnings was said to be due to additional provisions for estimated customer refunds.

Compared to last year, net interest income at the unit increased 13% to A$578m and non-interest income dropped 6% to A$1.65bn.

The division’s net operating income was A$2.22bn, down 1% from A$2.25bn a year ago. Operating expenses at the unit rose 8% year-on-year to A$1.29bn.

Overall, the banking group reported cash earnings of A$8.06bn in the year to September 2018, flat compared to a year earlier.

The banking group’s statutory net profit also remained unchanged at A$8.07bn.

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On a cash earnings basis, net interest income at the group rose 4% to A$16.34bn while non-interest income dipped 4% to A$5.61bn.

Operating expenses at the group increased 5% year-on-year to A$9.58bn.

The group’s common equity tier 1 capital ratio stood at 10.63% at the end of September 2018, versus 10.56% in the previous year.

Westpac Group CEO Brian Hartzer said: “While the economic environment remains supportive, this result reflects the tough operating conditions for banks, with higher regulatory, compliance, and funding costs, and increased competitive pressure, particularly in the second half.

“In addition, provisions for customer refunds and related costs, along with legal costs, were $281 million after tax (equivalent to 3.5% of cash earnings) as we continued to work through regulatory investigations, remediations, and putting things right for customers.

“In response to these challenges, we’ve lifted productivity savings 16% to $304 million over the year. While earnings were flat, our balance sheet remains strong across all dimensions of asset quality, capital, and liquidity.”