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Highlights
- Westpac (WBC) posts a 1% drop in half-year profit.
- Impairments and higher costs hinder growth in lending and deposits.
- Interim dividend comes in below market expectations.
Westpac (ASX:WBC) has reported a decline in its half-year profit, reflecting a challenging period for the major bank. The financial institution saw its net profit slip 1% compared to the same time last year, dropping to $3.32 billion. This result came in below the $3.43 billion analysts had anticipated. The dip in profit was primarily driven by higher operating expenses and hedging-related impairments, which offset the growth seen in lending and deposits.
The bank’s performance highlighted the ongoing pressures in the banking sector, especially within a competitive lending and deposits landscape. Westpac (ASX:WBC) noted that despite these challenges, its net interest margin remained stable at 1.80%, the same as it was a year ago. However, the financial institution also flagged a notable increase in operating expenses, which surged 6% during the half-year period. This rise was attributed to higher wages, increased technology costs, and spending on the bank’s strategic UNITE program.
The interim dividend declared by Westpac (ASX:WBC) was 76 cents per share, down from 90 cents a year ago. This reduction was also below analysts' expectations, who had forecasted an interim payout of 80 cents. The dividend decision reflects the bank’s cautious approach, given the challenges faced in the first half of the financial year.
These results are the first to be delivered under new CEO Anthony Miller, who took charge recently. Miller remains optimistic about the bank’s direction, noting that business and institutional lending had seen strong growth, with Australian business lending up 14% and institutional lending up 15% year-on-year. This growth has been a bright spot amid otherwise subdued performance.
Despite the drop in profit, Westpac’s performance still carries weight in the broader ASX200, as its influence within the index is significant. Investors in ASX200 stocks often look for stability and solid dividends, and Westpac’s (ASX:WBC) results show that while the bank is facing pressures, it is making strides in key areas such as business and institutional lending.
For those interested in ASX dividend stocks, Westpac's performance can be a reminder of the balancing act between maintaining strong dividends and navigating through a competitive and challenging market. While the dividend payout has decreased, it still remains relevant for those focused on income-generating investments within the ASX200.
For more on how ASX200 stocks are performing and their dividend potential, consider exploring more about ASX dividend stocks.
As Westpac (ASX:WBC) continues to manage costs and invest in future growth, the next half-year results will be closely watched to determine how effectively the bank can rebound and what impact it will have on the broader ASX200 index.
