The building society has declined to comment about whether it tried to limit the damage after acknowledging the issue and apologising to customers in its annual report in mid-October, but failing to mention the apology in a media release about the annual report.

While it has advised and reimbursed some customers charged the incorrect interest rate because their offset transaction accounts were incorrectly linked to their home loans, thousands are still unaware the building society owes them money.

The embarrassing issue is similar to one admitted by the ANZ to the banking royal commission in 2018 that forced it to repay nearly $70 million to an unknown number of customers.

Newcastle Permanent chair Jeff Eather and chief executive officer Bernadette Inglis acknowledged customers were overcharged in an introductory statement with the 2018-19 annual report.

But a media release about the annual report's release did not highlight the offset issue or the apology, and simply referred to "one-off costs associated with customer remediation work" within a quote.

In the annual report Mr Eather and Ms Inglis said the building society had made provision for up to $4.2 million to reimburse affected customers, and the issue was discovered during "a recent review of our offset home loan accounts".

The review was in the wake of scathing criticism of the big four banks at the banking royal commission, headed by former High Court justice Kenneth Hayne, for years of misconduct, malpractice, fraud and procedures that cost Australians billions of dollars.

"Guiding our commitment to providing an exceptional customer experience is the principle that although we may not get it right every time, we will own any mistakes and work incredibly hard to make amends, and do all we can to prevent an issue from recurring," Mr Eather and Ms Inglis said in the annual report.

"Our team are currently working hard to determine which customers have been affected. We sincerely apologise and we are committed to reimbursing any impacted customers," Mr Eather and Ms Inglis said.

"Owning our mistakes is a core organisational value as we continue to honour our customers' trust through transparency and putting our customers first in all that we do."

The building society said that despite "challenging economic, regulatory and competitive conditions throughout the year, the organisation achieved a well-balanced performance, recording a net profit after tax of $35.1 million".

The figure was a 19 per cent drop in its 2017-18 net profit after tax result of $43.8 million.

"Our net profit after tax is a reduction on the prior year, reflecting the impact of subdued housing growth, the low interest rate environment, and intense competition," Mr Eather was quoted in the media release.

In the only reference to the offset issue in the media release, Mr Eather is quoted saying: "The result also included increased investment in strategic projects to deliver digital transformation for the benefit of customers, one-off costs associated with customer remediation work and restructuring of parts of the business to support future customer value," he said.

In 2018 the banking royal commission was told that since July, 2010 almost 540,000 Australian consumers had been overcharged $239 million because of home loan account administration and processing errors, including failure to link offset accounts.

In a statement on Tuesday the Newcastle Permanent repeated its apology to affected customers and said it "sought to advise our customers as early as possible".

In addition to the apology in the annual report there was another apology at the annual general meeting, the statement said.

The building society also self-reported the issue to the Australian Securities and Investments Commission. It confirmed the issue affected about 18,000 customers.

"Given the complexity of the individual amounts to be calculated on a per customer basis over time, we are taking a staged approach, and have commenced connecting with affected customers, and are making payments to around 18,000 customers throughout 2020," the statement said.

"No action is required from our customers, as we will connect with each customer individually."

The building society said customers with questions should phone 13 19 87 or visit a local Newcastle Permanent branch. Last week it announced it was shutting down Nelson Bay, Cardiff, Maitland and Mayfield branches.