Westpac shares rise on special dividend, share buyback boost
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More news: Shares in Westpac rose 2% to $26.95 in early trading on the ASX after Australia's third-biggest lender by market value announced a special dividend of 15 cents a share along with an expansion of its share buyback program by $1 billion.
What they said: Jarden analyst said in a note: "Overall, we think Westpac delivered a solid and hard-to-fault result with beats across most lines. The stabilisation of Core NIM (net interest margin) over the last six months is a clear positive and suggests that the margin drag is now largely behind it".
Westpac boosts buyback, dividend despite first-half profit drop
The news: Banking major Westpac has declared a special dividend and boosted its share buyback despite reporting a drop in first-half profit as margins contracted.
The numbers: Net profit for the six months to 31 March 2024 was down 16% from a year ago to $3.34 billion, in line with estimates while revenue dipped 4% to $10.59 billion. Its net interest margin declined 7 basis points to 1.89%.
Despite this, the lender will deliver a 15 cents a share special dividend to shareholders on top of a 75 cents a share ordinary dividend. It will also increase its share buyback by $1 billion on top of the previously announced $1.5 billion buyback.
The context: Westpac attributed the drop in its margins to the impact of competition in the key mortgage market. While net interest income remained flat at $9.13 billion, operating expenses were up 8% due to higher software amortisation expenses and rising wages.
Chief executive Peter King said the bank has seen an uptick in stress in its loan books, but added that this is expected given the large increase in interest rates, high inflation and taxation and that the lender remains appropriately provisioned and in a good position to help customers.
What they said: “While economic growth has slowed, unemployment remains low by historical measures. We believe the economy is on track for a soft landing … However, this scenario is not certain,” King said in a statement.
The source: ASX announcement
