Westpac Banking Corp (ASX: WBC) shares will be worth watching closely next month.
That's because the banking giant is scheduled to release its half-year results on 8 May.
Ahead of the release, let's take a look to see what the market is expecting from Australia's oldest bank.
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What is expected from Westpac's half-year results
There will be three key metrics for investors to look out for when Westpac releases its results. These are its cash earnings, dividend, and its net interest margin (NIM).
In respect to the former, analysts at Goldman Sachs are expecting Westpac to report cash earnings (before one-offs) of $3,781 million. While this will be a touch short of the consensus estimate of $3,788 million, it will still be a sizeable 22.2% increase on the prior corresponding period.
As for its dividend, the broker has pencilled in a fully franked interim dividend of 72 cents per share. This will be an 18% increase from FY 2022's interim dividend of 61 cents per share.
Finally, all eyes will be on the bank's NIM. Goldman spoke at length about its margins and revealed that it expects Westpac's NIM to increase to 2.03% for the half. It said:
WBC's 2H22 NIM was up 5 bp hoh to 1.90% (ex Treasury & Markets at 1.80%) and we note that WBC's exit NIM (ex Treasury & Markets) for the month of Sep-22 was 1.85%. WBC expects the 1H23 NIM (ex-Treasury and Markets) to be higher than the Sep-22 exit and higher again in 2H23 albeit with a moderating hoh increase. With deposit competition currently being a key area of focus, we will be keen to get an update on how current levels of deposit repricing have impacted mix shifts, and what WBC's expectations are around competition going into 2H23. We currently forecast 1H23E NIMs to increase +13 bp hoh to 2.03%.
Are Westpac shares good value?
Goldman sees plenty of value in Westpac shares at the current level. It currently has a conviction buy rating and $25.86 price target on them.
So, with the bank's shares trading at $22.25, this implies potential upside of 16% for investors over the next 12 months.
In addition, the broker expects an attractive dividend yield. It is forecasting a fully franked full-year dividend of $1.44 per share. This implies a 6.5% yield for investors, boosting the total potential return from Westpac shares to beyond 22%.
