URGENT UPDATE: Westpac Banking Corp (ASX: WBC) shares are down 1.5% in morning trade, now valued at $38.12, following the release of its fiscal year 2025 results. This sharp decline comes despite the bank reporting a robust $6.9 billion profit and a dividend increase.
The financial giant announced its FY 2025 results earlier today, revealing a 3% increase in net interest income to $19.473 billion, driven by a 6% rise in loans to $851.9 billion. This includes a 5% growth in Australian housing loans and a remarkable 15% increase in business lending.
Despite these positive figures, Westpac’s net interest margin (NIM) shrank by 1 basis point to 1.94%, reflecting intense competition in the lending sector. However, this figure surpassed the consensus estimate of 1.93%, providing a glimmer of hope for investors.
Westpac’s customer deposits also saw a significant increase, rising 7% to $723 billion, fueled by a 10% growth in consumer deposits. Yet, operating expenses surged 9% to $11.916 billion, influenced by restructuring costs of $273 million, which management highlighted as contributing to the overall cost increase.
Westpac’s CEO, Anthony Miller, expressed satisfaction with the bank’s performance, stating, “
This has been a solid year at Westpac and I’m pleased with the result we are delivering today.
” He emphasized the bank’s strong balance sheet and the potential to deliver more value to customers and shareholders.
In a strategic move, Westpac announced the sale of its $21.4 billion RAMS mortgage portfolio to a consortium that includes Pepper Money Ltd, KKR, and PIMCO. Although the sale is at a slight premium to the gross loan value, Westpac anticipates a loss on the transaction after costs are accounted for. Miller noted that this sale will streamline operations and enhance strategic flexibility.
As Westpac navigates a challenging financial landscape, investors are closely watching how these developments will impact the bank’s stock performance and overall market position. With the market reacting negatively today, analysts are urging stakeholders to consider the long-term implications of these results.
The bank’s board has decided to increase its full-year dividends by 1% to 153 cents per share, indicating a commitment to returning value to shareholders despite the profit decline.
As the financial community digests these results, Westpac’s next moves in response to market pressures and operational changes will be critical to its future success. Investors should stay tuned for further updates and analysis in the coming days.
