Westpac shares up despite profit fall
Make us a preferred source
Make us a preferred source on Google
More news: Westpac shares were up 1.38% in early trading on Monday despite the major bank posting a net profit reduction of 6%.
UBS analysts said the positives of the results were around FTE reductions, a stable core net interest margin, and “slightly better” than expected credit impairments.
They said revenue was solid and pre-provision operating profit was slightly ahead of expectations while credit losses were lower than market expectations.
Westpac posts $1.5bn quarterly profit as margins contract
The news: Banking major Westpac has reported a dip in December quarter profit as margins contracted amid deposit and lending headwinds.
The numbers: The lender posted unaudited net profit of $1.5 billion for the three months to December 2023. This was 6% lower than the quarterly average over the previous six months and slightly lower than analyst expectations. Its net interest margin declined to 1.78%. Expenses for the quarter were down 6%, while impairment charges rose by three basis points to 10 basis points.
The context: Westpac said its core margin, which contracted by four basis points, had been “well managed” despite competition for loans and deposits. Over the quarter, it grew deposits by $7.9 billion, 1.1 times the average of the sector, while loan growth of $5.6 billion was in line with the sector average. The lender said while there was a reduction in stressed business loans, a nine basis points rise in 90 plus day mortgage delinquencies, reflected a “tougher economic environment”.
What they said: “We expect the economy to remain resilient, supported by low unemployment and healthy corporate sector balance sheets. The economic slowdown, combined with abating inflationary pressures, should provide scope for monetary policy to become less restrictive within the next year,” CEO Peter King said.
The source: ASX announcement
