Banking on uncertainty
Westpac is the latest big bank to announce a share buyback. Here's what that's telling us about the economy.
“Unexpectedly resilient” has become the go-to phrase for current conditions in the global economy. In fact The Economist’s latest cover captures this sentiment with an image of a woman and dog walking in thin air not realising there’s no longer a bridge beneath them.
There was an air of disbelief too from Westpac chief executive Peter King today at the bank’s annual result. There were plenty of signs of consumers and business are being “squeezed” but few signs of them breaking.
Westpac's half-year numbers were broadly in line with expectations and its better-than expected-margin performance in particular stood out.
But King and Westpac's decision to buy back $1.5 billion in stock in the current half was the headline news and a telling sign for the state of the economy. It confirms a theme: there’s not a lot do with extra capital when things seem better than they should be, and the outlook is so fraught.
