Westpac (ASX:WBC) share price battered by Micro and Macro Economic Headwind

  • November 04, 2020 04:21 PM AEDT
  • Team Kalkine
    Team Kalkine
    Team Kalkine
    16964 Posts

    Team Kalkine comprises of experts who understand various markets nuances and are enthusiastic and passionate to provide best possible offerings in the form of insights and stories. The team has rich experience of working across different markets with...

Westpac (ASX:WBC) share price battered by Micro and Macro Economic Headwind

Summary

  • Westpac bank shares down as company disappoints investors over full-year results performance.
  • Kiwibank blamed the situation on coronavirus pandemic and the recent AU$1.3 billion civil penalties.
  • Westpac made significant changes in the business strategy to improve performance.

The Westpac Banking Corp (ASX: WBC, NZX: WBC) share price has been on a precipitous slide since first quarter CY2020. For the Kiwibank, it's been a roller coaster ride this year, as the ultra-low interest rates are pressuring the banks on their net interest margins (NIMs).

Westpac recently released its full-year results for the 12 months ending 30 September, the repercussions of which also reflected on its share prices. Net profit for the group reported at AU$ 2,290 million, lowered by 66 per cent and cash earnings per share (EPS) fell by 63 per cent to AU$0.725.

The earnings have been impacted because of various factors erupting from COVID-19 and AUSTRAC fine.

The COVID-19 impact led to increased impairment charges, higher cost, and lower-income. Most importantly, the results reflect a sharp decline in economic activity in the country. The bank is fined AU$1.3 billion in civil penalties for breaches to the AML/CTF act.

On a positive note, Westpac has been successful in maintaining the strength of its balance sheet. Its Common Equity Tier 1 capital ratio remains at 11.13 per cent.  

However, the disappointment continues with the bank declining to pay interim dividend, citing the coronavirus pandemic impact as a reason. The final dividend announcement of AU$0.31 is also likely to discourage income-focused investors. Since 1986, this is the first time that Westpac has denied to pay a biannual dividend.

Read More: Westpac slashes dividend as profit nosedives by 66%

Hopes for the better tomorrow:

On a disheartening note, Westpac Group CEO, Peter King commented that the year 2020 had been a challenging year for the company and its financial results had been disappointing. King said that the bank had to navigate through higher expenses because of the increase in resourcing to manage the unprecedented demand due to COVID-19 crisis.

Will the housing boom impact negatively?

Westpac NZ CEO David McLean interacted with the media in light of the latest housing boom in the country. McLean said that the hike is not a bad thing for a short run, but it is not healthy, especially in the long term. The consumer's confidence is high in the wake of the post-Covid situation which is acting as a 'sugar rush', but to continue such record-high housing prices for a long run, (which we can see currently) will harm the country.

He emphasised that the situation will worsen in creating inequality. While interacting with the media, he said that the Reserve Bank was aware of the problem and was fighting to tackle it. Over the years, Westpac has made a steady process and has become a more straightforward, and robust bank.

The Kiwibank recently made many significant changes addressing its shortcomings and reshaping the key areas to focus on becoming a customer-focused business.

Westpac stock on focus:

In the Westpac stock news, The Westpac Banking Corp (ASX: WBC, NZX: WBC) share price today was trading at NZ$18.65 down to 1.53% as of 4:45 PM NZDT.

Good Read: Westpac (ASX:WBC) announces $1.22 billion drop in cash earnings in 2H20

 

 


Disclaimer
The website https://kalkinemedia.com/au is a service of Kalkine Media Pty. Ltd. (Kalkine Media) A.C.N. 629 651 672. The principal purpose of the content on this website is to provide factual information only and does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stock of the company (or companies) or engage in any investment activity under discussion. We are neither licensed nor qualified to provide investment advice through this platform. In providing you with the content on this website, we have not considered your objectives, financial situation or needs. You should make your own enquiries and obtain your own independent advice prior to making any financial decisions.
Some of the images that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed on this website unless stated otherwise. The images that may be used on this website are taken from various sources on the web and are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it below the image. The information provided on the website is in good faith, however Kalkine Media does not make any representation or warranty regarding the content, accuracy, or use of the content on the website.

 

   
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK