Westpac shares (ASX: WBC) have moved into negative territory on a year-to-date basis, down 0.31%, having shed 5.97% over the past 5 trading sessions. The recent dip comes as the banking group released earnings, posting a Q1 profit of A$1.7 billion, reflecting a 9% decline due to specific one-off items.
The company’s earnings for the first quarter were down from the previous period, however, when excluding these specific one off items, the bank’s profit would have grown by 3%, reaching A$1.9 billion. This performance improvement is despite a slight decline in the net interest margin by two basis points, settling at 1.81%.
Despite the somewhat challenging start to the year, over a longer term view the stock price remains in an upward trend, having gained 28% over the past 12 months.
The bank’s revenue saw a modest 2% increase, while expenses rose by 1%, underlining a careful cost management approach. Notably, Westpac completed 62% of its A$3.5 billion share buyback program, reflecting confidence in its capital position and a return of value to shareholders.
In terms of lending and deposits, Westpac reported a total lending volume of A$820 billion, accompanied by deposits amounting to A$688 billion. Moreover, there was a slight improvement in the quality of its loan book, with loans overdue by 90 days or more decreasing to 0.44% from 0.47%.
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Westpac forecasts a subdued economic environment with Australia’s GDP expected to grow at a rate of 2.2% in both 2025 and 2026. Additionally, the unemployment rate is projected to rise to 4.5% by the fiscal year’s end in 2025. Despite these challenges, residential property prices are anticipated to rise by 3% within the year.
The bank’s CEO, Anthony Miller, noted the potential for interest rate relief if inflation were to ease further, which could provide some economic stimulus. Miller assumed the role of chief executive on December 16, bringing a fresh perspective to the bank’s strategic direction.
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