Westpac Share Price up 5% after Profit Jump (ASX:WBC)

The Westpac Banking Corporation [ASX:WBC] share price have spiked 5.2% after delivering good news on their first-half report.

Profits up, dividend is on

For the first half of FY21, Westpac delivered a $3.4 billion net profit. That’s a 213% increase when compared to FY20 second half and a 189% jump when compared to the same period last year.

Westpac also reported $3.5 billion in cash earnings, a 256% increase from the same period last year when they reported $993 million in earnings and the company decided to defer their dividend.

Westpac Group CEO, Peter King said:

It has been a promising start to the year with increased cash earnings, growth in mortgages and continued balance sheet strength.

First half earnings were considerably higher than the prior corresponding period, mainly due to an impairment benefit reflecting improved asset quality and a better economic outlook.

Australian mortgages increased $2.6 billion over the past six months, with good growth in owner occupier loans partly offset by lower investor lending. Owner occupier loans increased 3 per cent, with first home buyers making up 13 per cent of new loans.

The property market is still going strong despite the pandemic, but interest rates are stuck at record lows at 0.10%.

To keep the business competitive through the recovery, Westpac said they are looking to reduce their costs from $10 billion last year to $8 billion by 2024 by increasing digital banking and branch closures.

Westpac has already decreased the number of branches from 971 in March 2019 to 889 in March this year and has increased digital active customers from 4.9 million to 5.15 million in the same period.

What happens next for the WBC Share Price?

With such a jump, Westpac has declared an interim dividend of 58 cents a share.

Share price was trading at $26.25 at time of writing, up from $24.98 at yesterday’s close.

Are our banks safe? The Rum Rebellion’s editor Vern Gowdie tackles that question and more in his free report ‘How do I protect my savings and are banks safe?’.

You can access it here.



Selva Freigedo

Selva Freigedo is a research analyst for The Rum Rebellion.

Born in Argentina, her passion for economic analysis started at a young age. Her father was an economist for the Argentinean governments and the family used to discuss politics and economics at the dinner table.

Argentina is a country with an unusual economic history. Growing up there gave Selva first-hand experience on different economic phenomena such as hyperinflation, devaluation and debt default.

Selva has also lived in Brazil, Spain and the USA.

Back in 2000 she was living in the US as the dot com bubble popped…
And in 2008 she was in Spain as the property market exploded and then collapsed…

She has seen first-hand what happens when bubbles burst.

Selva joined Fat Tail Investment Research’s team in 2016, as an analyst. She now writes from her vantage point in Australia, where she settled in 2015.

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