Westpac has suffered a 62 per cent dive in full-year cash earnings, largely due to COVID-19 and a $1.3 billion penalty for breaches of money laundering and terror financing laws.

The bank on Monday reported cash earnings of $2.6 billion for the 12 months to September 30.

Chief executive Peter King said 2020 had been a particularly challenging year and the result was disappointing.

Westpac’s costs rose by six per cent as it handled more requests for support amid the pandemic, protected staff and customers from the coronavirus, and improved operations to meet regulatory standards.

The Australian Transaction Reports and Analysis Centre’s finding that the bank failed to meet laws preventing money laundering and terror financing on 23 million occasions prompted more spending on technology and training.

Most of the breaches happened between 2013 and 2018.

The final dividend was 31 cents per share, fully franked. This was lower from the 2019 equivalent of 80 cents per share, fully franked.

The dividend was the maximum allowed under regulator guidance from earlier this year for banks to conserve capital during the pandemic.

Many customers have deferred repayments on home loans due to losing work and income during the pandemic.

There was $16.6 billion in home loans with deferred repayments from 41,000 mortgage accounts on October 28.

Mr King said more than two thirds of these customers had resumed repayments.

Yet he acknowledged government support programs such as JobKeeper, which have helped employers retain staff, would expire.

“Next year will be when we find out which customers have lasting impacts from COVID,” Mr King told investors.

There was $1 billion in small business loans with deferred repayments from 4,300 accounts.

Moody’s Investors Service vice president Daniel Yu said subdued lending, pressure on margins from low interest rates and more competition contributed to Westpac’s result.

He noted the impairment charges were four times that of the previous year. Impairment charges are reduced asset values, which must be counted as expenses.

Mr King said impairments had a significant impact.

Looking ahead, he said economic growth would improve through 2021 and 2022 but unemployment would remain elevated.

The Westpac result has continued the big banks’ mixed run of full-year reports. ANZ Bank last month reported a 42 per cent drop in full-year cash profit, while the Commonwealth Bank in August reported a 11.3 per cent dip in full-year cash profit.

Shares were down by 0.67 per cent to $17.79 at 1356 AEDT.