August has been a good month so far for the Westpac (ASX:WBC) share price

Shares in the bank are up almost 5% so far in August. We take a closer look
The post August has been a good month so far for the Westpac (ASX:WBC) share price appeared first on The Motley Fool Australia. –

The Westpac Banking Corp (ASX: WBC) share price is having an August to make investors smile.

At close of trade on Friday, shares in the Australian big four bank were trading for $25.76 – down 0.23%. For context, the S&P/ASX 200 Index (ASX: XJO) ended 0.03% lower.

Since the beginning of the month however, Westpac shares have risen 4.93% while the benchmark index is 0.85% higher.

This green August comes after a so-so July. The Westpac share price fell 5% the prior month despite a rising overall market.

Let’s see what’s been affecting Westpac this month.

The month so far for Westpac

Shockwaves from the biggest M&A in Australian history, the $39 billion acquisition of Afterpay Ltd (ASX: APT) by Square Inc (NYSE: SQ), may have extended to the Westpac share price.

As Motley Fool previously reported in October last year, Australia’s oldest bank revealed a partnership with Afterpay which would see Westpac provide its banking-as-a-service platform to the buy now, pay later contender.

The offering was expected to be symbiotic – Afterpay gets white-labelled bank accounts and Westpac extracts revenue from the payments shift. However, that was before US-based payments giant Square entered the scene.

Now Westpac has been unnerved by Afterpay shacking up with the competition. Square commands a larger market capitalisation than the Aussie bank, at US$121 billion. The company is making a conscious move to disrupt traditional banks with its business deposits and loans.

Westpac also announced the sale of its life insurance business to Dai-ichi Life Group subsidiary, TAL.

TAL will pay $900 million for the business. It will also enter a strategic alliance to provide Westpac’s Australian customers with the service for another 20 years.

According to Westpac, the divestment “releases significant capital”.

Westpac has lost a total of $1.3 billion (post-tax) on the sale. However, it will add around 12 basis points to Westpac’s Level 2 common equity Tier 1 (CET1) capital ratio. 

The big bank will record a post-tax loss of $300 million for the life insurance business in its financial year 2021 results. The immediate loss mainly relates to transaction and separation costs.  

Westpac share price falls on third quarter update

The Westpac share price slid after the release of its third-quarter update in August.

The bank revealed a CET1 ratio of 12% on a reported basis and 12.5% on a pro forma basis. As a result, the Westpac Board indicated it will consider a further return of capital to shareholders. An update on this will be made with its FY 2021 results later this year.

As well, Westpac gave an unfavourable forecast with its update. The bank once again reiterated that it was facing net interest margin (NIM) headwinds and therefore expected its second-half NIM to be lower than what was achieved in the first half. It also reaffirmed its expectation for its expenses to be higher year-on-year in FY 2021.

Westpac share price snapshot

Over the past 12 months, the Westpac share price has increased by 49.3%. It has outperformed the benchmark ASX 200 by about 27 percentage points. Year-to-date it has risen 31.0% to the ASX 200’s 11.6% lift.

Westpac has a market capitalisation of $94.7 billion.

The post August has been a good month so far for the Westpac (ASX:WBC) share price appeared first on The Motley Fool Australia.

Should you invest $1,000 in Westpac right now?

Before you consider Westpac, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Westpac wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

These ASX 200 bank experts are forecasting a bumpy ride for our economy

Westpac (ASX:WBC) share price rises after broker tips $5bn buyback
Top brokers name 3 ASX shares to buy today

ASX 200 midday update: Westpac update, Breville and Magellan sink

Westpac (ASX:WBC) share price falls on margin pressure concerns

Motley Fool contributor Marc Sidarous owns shares of Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO and Square. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!