The Westpac Banking Corp (ASX: WBC) share price is down 1% after the major bank held its annual general meeting (AGM) for investors.
An AGM is an opportunity for management to tell shareholders about how the last financial year went and what could be a tricky FY23.
Westpac’s worrisome outlook
The major ASX bank share thinks that the combination of rising interest rates and the increase in the cost of living will be “felt more fully by consumers and businesses after Christmas.”
But, the bank tried to reassure shareholders by saying that it’s well placed to support customers through what will be a “tougher period”.
Westpac believes that 2023 heralds a “new phase” for the bank. The leadership said that the bank’s efforts over the past few years have made it into a “simpler and stronger bank”.
The CEO of Westpac, Peter King said:
With our strong balance sheet, sharper strategy and committed team, we are focused on strengthening the franchise and accelerating performance. We enter the year with optimism and a commitment to improving customer experience and, as a result, continuing to build the long-term value of Westpac.
Chair retires
After acknowledging the “considerable progress” that has been made in simplifying the bank, lowering the cost base and addresses risk and cultural issues, chair announced that he would be retiring.
Focus on reducing costs
In FY22, Westpac saw its statutory expense to income ratio reduce from 63% to 55%, and it’s focused on lowering this to the mid-40s.
It’s also looking to integrate its brands so that customers from any of its brands can transact at any of its Australian branches (such as Westpac, Bank of St George, Bank of Melbourne and RAMS).
After losing market position across its portfolio, this has now stabilised and it’s now “operating broadly in line with major bank competitors”. However, it “still lags peers in several areas” and the bank is “committed to rectifying these.”
Final thoughts on the Westpac share price
Westpac shares have been through a lot since the Royal Commission. It may finally be putting the worst behind it. The major ASX bank share can benefit from higher interest rates, but bad debts could increase as well.
It’s certainly cheap on a price/earnings ratio (p/e ratio) basis. But, there are other ASX shares that could achieve more growth.
