Insights

Westpac (ASX:WBC) share price on watch after cash earnings update

The Westpac Banking Corp (ASX:WBC) share price will be on watch on Monday after the release of an update on cash earnings impacts in FY 2020…
The post Westpac (ASX:WBC) share price on watch after cash earnings update appeared first on Motley Fool Australia. –

Westpac

The Westpac Banking Corp (ASX: WBC) share price will be one to watch this morning following the release of an update on its upcoming second half results.

What did Westpac announce?

Westpac has announced that its cash earnings in the second half will be reduced by $1,220 million after tax due to a number of notable items.

According to the release, the notable items include new items of $816 million after tax, combined with the previously announced additional $404 million provision after tax for AUSTRAC matters. This is expected to reduce the banking giant’s CET1 capital ratio by 24 basis points.

What are the notable items?

The notable items include a $568 million after tax write-down of goodwill and intangibles associated with Westpac Life Insurance Services and Auto Finance businesses, along with a write-down of capitalised software.

It also includes an increase in the provision and costs associated with the AUSTRAC proceedings of $415 million after tax. This includes the previously announced $404 million in provisions associated with the court approved civil penalty and AUSTRAC’s legal costs.

Also included is an increase in provisions for customer refunds, repayments, associated costs, and litigation provisions of $182 million after tax and asset sales and revaluations which reduces cash earnings by $55 million after tax.

The latter includes the revaluation of Life insurance liabilities and a loss on the agreed sale of its vendor finance business. These items, which totalled $267 million after tax, were partly offset by a benefit after tax of $212 million from a revaluation of its holding in Zip Co Limited (ASX: Z1P).

Reporting changes.

In addition to the above, Westpac has advised of changes to its divisional structure.

This includes the creation of the Specialist Businesses division, which will see businesses from the Consumer, Business and WIB divisions moved and the reallocation of certain centrally managed costs across divisions.

It will also see the movement of certain SME and Business products from the Business division to the Consumer division. It feels this better reflects its new Lines of Business operating structure.

The changes will have no impact on its cash earnings, reported net profit, or balance sheet in prior periods. However, they do impact divisional cash earnings (and individual line items) and balance sheet items in prior periods.

Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

Find out the names of our 3 Post COVID Stocks – For FREE!

*Returns as of 6/8/2020

More reading

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Westpac (ASX:WBC) share price on watch after cash earnings update appeared first on Motley Fool Australia.

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!