Westpac shares rise on Q3 result, UBS predicts consensus upgrades
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More news: Westpac shares advanced in early trade after the big four lender reported $1.9 billion in third-quarter profit.
Shares were up 4.7% to $35.49 at 10:55am AEST, extending annual gains to 23%.
UBS analyst John Storey said the result showed strong net interest margin growth and controlled bad debts, positioning the bank well for consensus upgrades.
He noted Westpac would need to achieve Q4 profit of $1.4 billion to meet full-year consensus forecasts, compared to an average of $1.7 billion delivered in the year to date.
Storey said consensus upgrades of 2.8% to 6.2% are likely after today's update.
What they said: "Similar to CBA, Westpac appears to have had a strong trading income performance in Q3," he said.
"Overall revenue is tracking ahead of UBS and Visible Alpha consensus."
Westpac reports $1.9b third quarter profit
The news: Westpac has reported a $1.9 billion net profit (unaudited) for the third quarter of the financial year.
The numbers: Excluding notable items, the reported net profit figure was up 8% on the back of 4% revenue growth.
Westpac said $5 billion of net interest income was largely driven by net interest margin expansion to 1.99%.
Margin growth of one basis point was seen equally across deposits and loans, with customer deposits growing by $10 billion for the quarter and gross loans by $16 billion. The highest percentage growth was recorded in the business bank at 5%.
Expenses over the period grew 3% and impairment charges were five basis points of average gross loans.
The bank's common equity tier 1 ratio was up modestly to sit at 12.3%.
The context: Chief executive Anthony Miller attributed the growth to Westpac's business and institutional bank and said the robust underlying economy would support the business going forward.
"The resilience of both households and businesses has been aided by the reduction in interest rate cuts and the moderation of inflation. This is reflected in lower levels of customer stress. It should also underpin a recovery in private sector activity and support lending growth," Miller said.
He flagged greater investment in customer services, including the opening of a handful of new branches and further investment in frontline AI.
"To further strengthen customer security we are piloting AI technology to enhance real-time scam detection, helping bankers respond quickly to protect customers," Miller said.
Westpac also noted greater investment was being made into its UNITE tech simplification program, with additional resources being allocated to the initial phase of the work.
The source: ASX
