Westpac Shares Declined Over 3% On Trading Ex-Dividend

Westpac Shares Declined Over 3% On Trading Ex-Dividend

Westpac’s stock price dropped over 3.866% trading ex-dividend on 16 May 2019. The stock last traded at $25.850 with a price to earnings multiple of 13.050x and a market capitalisation of $92.71 billion.

One of the big four banking corporation, Westpac Banking Corporation (ASX: WBC) declared a dividend of $0.940 for the period of six months ended 31 March 2019. The dividend outlines the record date of 17 May 2019 with the ex-dividend date of 16 May 2019 and the payment date of 24 May 2019. The company also announced the continuation of the dividend reinvestment plan (DRP) and a 1.5% discount, applicable on market price.

1H FY19 has been a disappointing period for the company as Banking Royal Commission alleged Westpac for being involved in a number of misleading practices in financial sector space, like, charging fees for no services. In this scenario, WBC added $896 million pre-tax in provision for customer remediation programs with the objective to refund its impacted customers as early as possible.

The half-year results read that WBC has repaid around $200 million to customers over the past 18 months. Westpac has provisioned total $1,445 million pre-tax over the last three years in relation to its customer remediation programs.

Despite a low growth environment, Westpac maintained a strong common equity Tier 1 capital ratio at 10.64%, allowing the bank to absorb the significant impact of customer remediation provisions and the costs of its wealth reset.

(Source: Company’s 1H FY19 Results) 

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WBC’s management noted the downtrend over the 1H FY19 period, taking the company’s statutory net profit down by 24% to $3.173 billion for the half year ended 31 March 2019. Cash earnings declined by 22% for the six months to $3.296 billion and cash earnings per share were down 23% to 96 cents per share.

Westpac Group CEO, Mr Brian Hartzer stated that “the past six months to 31 March 2019 has been a turning point for the bank. Westpac is actively addressing legacy issues while improving its products and services to ensure the delivery of right customer outcomes.”

The bank has decided to exit its personal financial advice business to completely focus on the parts of its wealth business where Westpac enjoys a competitive edge. The company further focuses on productivity which remains its top priority with the target of $400 million in productivity savings over the full year.

During 1H FY19, Westpac achieved a cost saving of $146 million, reducing the full-time equivalent staff by 788 over the six months. Mr Hartzer said the bank is on track of achieving its productivity target with further cost initiatives underway.

(Source: Company’s 1H FY19 Results)

The management advised that to safeguard against future issues, the group is working towards the formulation of more stringent governance, improvisation of culture, and delivery of more consistent customer outcomes.

WBC stock has witnessed a negative price change of 10.39% over the past 12 months despite an upside of 2.71% recorded in the past three months.


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