Search ASX code:
Generic filters

Search ASX code:
Generic filters

Search ASX code:
Generic filters

Search ASX code:
Generic filters

Why Westpac (ASX:WBC) just announced another $816 million profit hit

Westpac Banking Corp (ASX: WBC) shareholders may be disappointed today after the bank revealed a $816 million profit hit.

FY20 second half earnings hit

Westpac’s second half earnings will be reduced by $1.22 billion after tax from ‘notable items’. These notable items include $816 million (after tax) of new items and $404 million of an already announced $404 million AUSTRAC provision.

In total, these items are going to reduce the bank’s CET1 capital ratio by 24 basis points, though some items don’t have an impact on capital.

There is going to be a writedown of goodwill and intangibles associated with Westpac Life Insurance Services and its auto finance business along with a writedown of capitalised software. The write downs amount to $568 million after tax.

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

Westpac said that there’s an increase in provisions for customer refunds, repayments, associated costs and litigation provisions of $182 million after tax. This is relating to the Hayne Royal Commission impacts.

Finally, the net impact of asset sales and revaluations will reduced cash earnings by $55 million after tax. This includes the revaluation of Life insurance liabilities and a less on the sale of its vendor finance business. But those items totalling $267 million were partly offset by the after tax revaluation (amounting to $212 million) of Zip Co Ltd (ASX: Z1P) shares. But Westpac recently announced it was selling these Zip shares.

Summary

Westpac continues to be affected by ‘one off’ items every six months – particularly the Royal Commission impacts. It’s hard to say how long those costs will continue to impact the bank’s results. It has been a couple of years, you’d think it would be over by now.

There isn’t much about Westpac that attracts me right now. The net interest margin (NIM) is under pressure. It isn’t paying any dividends at the moment, and it may not be good for a while. Bad debts may rise because of COVID-19 impacts.

I’d much rather buy ASX dividend shares that have better dividend growth prospects like Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). You should bookmark the ASX dividend shares page so you can come back for more ideas.

Are you stuck wondering where to invest right now? Have you got cash 'sitting on the sidelines'? Are you looking for dividend income AND growth but don't know where to start? Rask's expert ASX analyst team has just released a full report, detailing where we'd invest $10,000 right now.

Not only are we offering these 11 investment ideas completely FREE, we've also released an in-depth podcast to go with the report!

So, whether you have $2,000 or $50,000, our brand new analyst report could help transform your watchlist. Right now, you can get the full analyst report emailed to you for FREE by CLICKING HERE NOW or simply entering your email below.

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Are you stuck wondering where to invest right now? Have you got cash 'sitting on the sidelines'? Are you looking for dividend income AND growth but don't know where to start? Rask's expert ASX analyst team has just released a full report, detailing where we'd invest $10,000 right now.

Not only are we offering these 11 investment ideas completely FREE, we've also released an in-depth podcast to go with the report!

So, whether you have $2,000 or $50,000, our brand new analyst report could help transform your watchlist. Right now, you can get the full analyst report emailed to you for FREE by CLICKING HERE NOW.

At the time of publishing, Jaz owns shares of WHSP.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

LIVE ASX Chat - Join in!

Play Video

Keep reading:

Rask Analyst’s $10,000 Hypothetical Portfolio 

Rask Australia’s expert analysts have just released 11 stock & ETF positions they’d buy right now as part of a $10,000 hypothetical portfolio. 

Completely free, this report comes with the exact ticker codes, how much the analysts would invest and a detailed over the company and why we like it. Plus a 60-min podcast! 

Simply enter your email address and we’ll send you the report.

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.