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If you've glanced at the Westpac Banking Corp (ASX: WBC) share price today and noticed a significant decline, fear not. There's a straightforward explanation behind the downturn, offering some relief to concerned investors.
As of afternoon, trading on 9 May 2024, shares in the banking giant have dipped by 3.06% to AU$26.3 apiece. While this may seem alarming, it's worth noting that the broader market, as represented by the S&P/ASX 200 Index (ASX:XJO), has also experienced a decline of 1.06%. Today, Australian investors are exhibiting skittish behavior, particularly in response to underwhelming sales updates from various ASX retail shares, underscoring weaknesses in consumer spending trends.
But what exactly is driving Westpac's AU$92 billion market cap to the bottom of the barrel today?
Dividend Deadline Impact on Westpac Shares
Before panicking, it's important to understand that the catalyst behind today's decline is not catastrophic. It simply boils down to the ex-dividend date.
For those unfamiliar, the ex-dividend date marks the point at which a company's shares begin trading without the entitlement to the next dividend payment. Shareholders listed on Westpac's share register as of yesterday will receive the fully franked dividend of 90 cents per share, while those added to the register today will miss out.
As expected, the share price reflects the absence of dividend entitlement, leading to a decline.
In this instance, Westpac's dividend, with franking credits factored in, holds a grossed-up value of approximately AU$1.29. Given yesterday's closing price of AU$27.89, subtracting the dividend value leaves us with around AU$26.60, aligning closely with the current Westpac share price.
Shareholders can anticipate receiving this interim dividend in their accounts by 25 June 2024.
Potential Influence from Commonwealth Bank of Australia (ASX:CBA)
There's a possibility that Commonwealth Bank of Australia's (ASX: CBA) third-quarter update is contributing to Westpac's downward trajectory today.
Investors often leverage insights from other companies within the same industry to shape their expectations. If CBA's update serves as any indication, the Australian banking sector may be experiencing a cooling off period.
Australia's largest bank reported a 5% decrease in unaudited statutory net profit after tax in Q3, amounting to AU$2.3 billion. This decline in profitability was attributed to a 1% dip in operating income, coupled with a 2% rise in operating expenses.
