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Highlights
- Westpac reported a 3% increase in net interest income to AU$18.9 billion for the fiscal year ending 30 September 2024, while net profit declined by 3% to AU$6.99 billion, reflecting mixed results across its business segments.
- Despite the drop in net profit, Westpac declared a fully franked final dividend of 76 cents per share, raising total ordinary dividends for FY 2024 to AU$1.51 per share, a 6% increase from the previous year.
- The bank announced a AU$1 billion share buyback plan, aimed at returning capital to shareholders and enhancing overall shareholder value.
Westpac Banking Corp (ASX:WBC) has made headlines today with the release of its full-year financial results, revealing both a slight increase in net interest income and a decline in net profit. The announcement is particularly significant for income investors as the banking giant also declared its latest dividend, providing insight into its financial health and future prospects.
For the fiscal year ending September 30, Westpac reported a 3% increase in net interest income, totaling AU$18.9 billion. However, the bank faced challenges in its bottom line, with net profit declining by 3% to AU$6.99 billion. The results reflected contrasting performances across its business segments. Notably, the Business & Wealth division saw a robust 13% increase in net profit, reaching AU$2.36 billion, while the Consumer segment struggled, posting a substantial 17% decline in net profit to AU$2.18 billion.
The weakness in the Consumer segment was attributed to intense competition in the mortgage market and a 1% rise in operating expenses, despite a 4% increase in net loans and an 8% growth in deposits during the year. However, management expressed optimism for FY 2025, noting a significant turnaround in the second half of the fiscal year, with the Consumer segment recording a 6% increase in net profit compared to the previous year.
In a surprising move, Westpac's board decided to increase its dividend despite the decline in profits. The bank declared a fully franked final dividend of 76 cents per share, bringing the total ordinary dividends for FY 2024 to AU$1.51 per share, representing a 6% year-over-year increase. Additionally, shareholders will benefit from a special interim dividend of 15 cents per share, resulting in total distributions of AU$1.66 per share for the year.
Westpac also announced a further AU$1 billion share buyback, aimed at returning capital to shareholders and enhancing shareholder value. The bank's chair, Steven Gregg, highlighted the significance of the special dividend, which is the first of its kind since 2013, and emphasized the bank's strong total shareholder return of 58% for the year, combining dividends and share price appreciation.
For investors looking to receive the upcoming dividend, the important date to note is November 7, when Westpac shares will trade ex-dividend. The dividend will be paid on December 19, making this an opportune time for income-focused investors to consider their positions in the bank's stock. With the combination of increased dividends and a share buyback program, Westpac is signaling its commitment to returning value to shareholders despite the current economic challenges.
