One leading fundie remains bullish on this Aussie bank.
The post Why this leading fundie is bullish on the Westpac (ASX:WBC) share price appeared first on The Motley Fool Australia. –
The Westpac Banking Corp (ASX: WBC) share price has been steadily climbing in 2021. Shares in the big four bank are up almost 32% year to date, and one leading fundie is bullish on their future prospects.
Why this leading fundie likes the Westpac share price
The leading fundie in question is Yarra Capital Management. The group’s May 2021 update for its Yarra Australian Equities Fund contained some upbeat commentary on Westpac.
Gains for the Westpac share price were sighted as a key contributor to the fund’s 2.40% 1-month return to 31 May 2021. According to the release, Westpac outperformed after a strong first half result and announcing an “ambitious cost-out program”. The bank unveiled a plan to target an $8 billion cost base by FY2024 in a bid to boost efficiency compared to a $10.2 billion cost base right now.
Westpac management is looking to slash its costs by exiting non-core businesses, increasing digitisation for customers and simplifying its organisational and operating structure. Yarra Capital remains overweight in its position and is hoping for more Westpac share price gains in 2021.
Yarra Capital described the cost-cutting plan as “challenging” and said that “achieving even half of it will be a reasonable outcome”.
The overweight position is based on the fund’s belief that earnings and post-COVID dividends will be better than expected. Yarra Capital is also expecting bad debt expenses to be close to zero over the next 18 months.
The Westpac share price has certainly been a strong performer in the year so far. After a tough 2020 marred with scandals and managing the COVID-19 pandemic, shares in the Aussie bank have rebounded strongly.
Westpac shares closed 0.6% higher on Monday with a $93.6 billion market capitalisation and a 3.5% dividend yield.
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. 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.