The Westpac Banking Corp (ASX: WBC) share price is in focus after the ASX bank share reported its FY24 result.
Westpac FY24 result
Here are some of the highlights from the report for the 12 months to 30 September 2024:
- Net interest income increased 3% to $18.9 billion, excluding notable items
- Net interest margin (NIM) decreased 1 basis point (0.01%) to 1.95%
- Underlying net profit down 3% to $7.1 billion
- Statutory net profit down 3% to $7 billion
- Final dividend per share of $0.75, up 5.5%
- Annual dividend per share of $1.51 per share
- $1 billion increase in the share buyback
There were a few key reasons for the decline in the profit, despite the increase in net interest income.
Non-interest income decreased 15% to $2.8 billion. Westpac said that while net fee income increased by 2%, it was more than offset by the decline in ‘markets’ and wealth management income.
Operating expenses increased 7% to $10.9 billion, excluding notable items. The bank disclosed higher software amortisation expenses, as well as inflationary pressures on wages, technology and third-party vendor costs were partially offset by cost reduction initiatives.
On the positive side of things impairment charges were 7 basis points (0.07%) of loans, down from 9 basis points (0.09%).
Another positive was the growth of loans and deposits.
Loans increased by 4% to $807 billion, including Australian housing loans (excluding RAMS) growing by 5% (or 1.2x the system), as well as growth in Australian business lending of 8%.
Deposits grew by 5% to $674 billion, mainly driven by growth in higher interest-bearing accounts in consumer and institutional.
Divisional performance
Compared to FY23, there was a very mixed performance of its segments.
Consumer net profit fell by 17% to $2.2 billion due to mortgage competition.
Business and wealth net profit increased 13% to $2.36 billion thanks to lending growth.
Institutional bank net profit rose by 2% to $1.37 billion.
New Zealand net profit increased by 10% to NZ$1.05 billion.
Final thoughts on the Westpac share price
Westpac said that it has managed its margins well in a competitive environment, while growing in line with the overall Australian banking system with loans and deposits. Its disciplined performance has set Westpac up for growth and success.
Some of the elements of this result were impressive. However, ultimately, profit declined. But, it’s pleasing to see Westpac rewarded shareholders with a larger dividend and share buyback.
With the Westpac share price up more than 40% over the past year, I wouldn’t say it’s good value today because its price/earnings ratio (p/e ratio). There are other ASX dividend shares I’d rather buy.
