Westpac (ASX:WBC) share price sinks 6% despite doubling cash earnings

This banking giant’s shares are sinking on Monday…
The post Westpac (ASX:WBC) share price sinks 6% despite doubling cash earnings appeared first on The Motley Fool Australia. –

The Westpac Banking Corp (ASX: WBC) share price has come under significant pressure on Monday.

In morning trade, the banking giant’s shares are down over 6% to $24.10.

Why is the Westpac share price sinking?

Investors have been selling down the Westpac share price today after its full year results fell short of expectations.

In case you missed it, Australia’s oldest bank reported a 138% increase in statutory net profit to $5,458 million and a 105% jump in cash earnings to $5,352 million. This allowed Westpac to declare a fully franked final dividend of 60 cents per share and announce a $3.5 billion off-market share buyback.

However, despite its cash earnings doubling in FY 2021, it was still short of the consensus estimate of $5.42 billion.

What else?

Also falling short of expectations and weighing on the Westpac share price was its off-market share buyback. While Westpac announced a significant $3.5 billion buyback, it was lower than the market was forecasting.

The team at Morgans, for example, were expecting Westpac to announce a buyback of $5 billion with its results, whereas Goldman Sachs was forecasting a $4 billion share buyback.

Goldman also notes that the bank’s expenses and net interest margin (NIM) were disappointing.

It commented: “WBC’s 2H21 NIM was down 10 bp hoh to 1.99% (1.98% ex notables) and was lower than our expectations (GSe, -6 bp to 2.03%).”

“On outlook, WBC notes that FY22 Margins are expected to be lower and highlighted exit margin ex. treasury & markets at 1.80% (1.87% Sep-21 half average),” the broker added.

As for expenses, Goldman said: “WBC 2H21 reported expenses were up 22% hoh, 5% higher than GSe. Excluding notable items, 2H21 expenses were up 9% hoh. WBC attributes most of the increase to higher staff expenses (+18%, +14% ex notables) due to the additional 1,396 FTE over the half on higher resourcing needs to improve risk management and compliance and to support customers impacted by hardship.”

All in all, a disappointing result from the banking giant.

One positive, though, is that the Westpac share price is still up 23% in 2021 despite today’s weakness.

The post Westpac (ASX:WBC) share price sinks 6% despite doubling cash earnings 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

Westpac (ASX:WBC) share price on watch amid earnings jump and $3.5bn buyback

5 things to watch on the ASX 200 on Monday

Could the Westpac (ASX:WBC) share price be about to take off?

This big bank ASX share is ready to break out

Westpac (ASX: WBC) share price rises as it announces changes to its board

Motley Fool contributor James Mickleboro owns shares of Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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 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!