Westpac shares on watch amid $6.99b profit and new buyback

Has the big four bank delivered the goods for investors this year? Let's find out.

| More on:
A man in a suit smiles at the yellow piggy bank he holds in his hand.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Westpac Banking Corp (ASX: WBC) shares will be on watch on Monday morning.

That's because the banking giant has just released its full year results.

Westpac shares on watch after results release

Here's a quick summary of its financial performance and key metrics:

  • Net interest income increased 3% to $18.9 billion
  • Net interest margin (NIM), excluding notable items, decreased 1 basis point to 1.95%
  • Non-interest income decreased 15% to $2.84 billion
  • Operating expenses increase 7% to $10.94 billion
  • Net profit down 3% to $6.99 billion
  • Fully franked final dividend of 76 cents per share
  • $1 billion share buyback

What happened during FY 2024?

Westpac had a solid year given the heightened competition in the mortgage market, delivering a net profit of $6.99 billion. This represents a modest 3% decline on the prior corresponding period and is a touch short of what Goldman Sachs was forecasting for the bank.

The main drag on its performance was the Consumer segment. Its net profit decreased 17% to $2.18 billion. This was despite net loans increasing 4% and deposits growing 8%. Management advised that this reflects intense mortgage competition and a 1% increase in operating expenses. Though, it is worth noting that its financial performance recovered in the second half, with net profit up 6% on the prior corresponding period.

The Business & Wealth segment was the star of the show, recording a 13% increase in net profit to $2.36 billion. This reflects net loan growth of 7% with business lending increasing by 9% due to strong growth in its target industries of agriculture, health and professional services. Expenses rose 4% year on year.

Things were also positive across the Tasman with the New Zealand segment posting a 10% increase in net profit to NZ$1.06 billion. A 3% increase in operating income reflected growth in lending and a higher net interest margin, while a 6% increase in operating expenses was driven by increased technology costs, software amortisation and inflationary pressures.

Finally, the Institutional Bank segment recorded a 2% increase in net profit to $1.37 billion. Management advised that a 6% rise in operating income reflects higher lending and deposit revenue, while a 10% rise in operating expenses was due to higher resourcing to support growth, as well as software amortisation from technology investments.

This allowed the Westpac board to declare a fully franked final dividend of 76 cents per share. This brought total dividends for the year to $1.51 per share, which was towards the upper end of its payout range.

Including the special dividend paid with its interim dividend, Westpac rewarded shareholders with a total payout of $1.66 per share. This was well short of Goldman's estimate of $1.80 per share.

Ready for 'growth and success'

Westpac's outgoing CEO, Peter King, was pleased with his final set of results and believes the bank is well-placed for the future. He said:

Our disciplined performance in FY24 has set Westpac up for growth and success. We've significantly improved our customer service, grown in key segments and delivered another financial result built on a solid balance sheet and capital position.

King also revealed that he is going out with a bang, announcing a $1 billion on market share buyback today. This is on top of a dividend increase. He adds:

Westpac's capital position is one of the strongest I've seen, allowing us to further increase the share buyback program by $1 billion. In addition, fully franked ordinary dividends increased by 6% this year with a final dividend of 76 cents per share. Total ordinary dividends for the year were 151 cents per share, towards the upper end of our payout range.

Commenting on his exit, King concludes:

After five years as CEO I'm pleased to hand the bank over in very good shape. Westpac is a simpler, stronger bank and we are better at managing risk. […] Following a period of simplification of the bank, I know our people are excited about the next phase of growth and I thank them for their support. I'm confident Westpac is positioned well for the future as it embarks on a new era under the leadership of Anthony Miller.

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Earnings Results

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

Up 74% in 2024, why is this ASX 200 stock rallying today?

Recurring revenues continue to grow.

Read more »

Man pointing at a blue rising share price graph.
Earnings Results

Guess which ASX All Ords share is soaring on 21% FY 2024 growth

Investors are piling into the ASX All Ords share today. Let’s find out why.

Read more »

Girl sliding down on snow with arms spread out.
Earnings Results

Elders shares on ice for a $475 million acquisition after profits plunge 55%

What on earth is going on with Elders shares today?

Read more »

A man has a surprised and relieved expression on his face. as he raises his hands up to his face in response to the high fluctuations in the Galileo share price today
Energy Shares

This ASX 200 mining stock just reported a 40% earnings jump

Investors appear pleased with this miner's performance during the first quarter.

Read more »

Business people discussing project on digital tablet.
Earnings Results

2 ASX All Ords shares surging over 10% on strong results

Investors are buying these shares in response to strong results this morning.

Read more »

A young woman holds her hand to her mouth in surprise as she reads something on her laptop.
Earnings Results

Xero share price rockets to record high on explosive half-year growth

The tech star delivered another impressive half year results this morning.

Read more »

A man cheers after winning computer game while woman sitting next to him looks upset.
Earnings Results

2 high-flying ASX 200 gaming shares splitting ways today

Which gaming giant is winning the admiration of investors amid results?

Read more »

Male building supervisor wearing high vis vest and hard hat stands and smiles with his arms crossed at a building site
Industrials Shares

This $23 billion ASX 200 stock is surging 6% while the market sinks. Here's why

This ASX 200 stock is shrugging off the wider market sell down today and racing higher. But why?

Read more »