The Westpac Banking Corp (ASX: WBC) share price has pushed higher in afternoon trade following the release of its annual general meeting presentation. At the time of writing the banking giant's shares are up almost 1% to $25.28.
Here are a few key takeaways from today's event:
Westpac has learnt a lesson from the Royal Commission.
At the event the bank dedicated a lot of time to talk about the Royal Commission.
Chairman Lindsay Maxsted acknowledged to shareholders that the bank did not "sufficiently understand and analyse customer complaints and, in many cases, they were not dealt with promptly enough."
He also admitted that the bank was "slow to focus on certain non‐financial risks", that some of its employee remuneration arrangements "inadvertently contributed to poor behaviour", and that it "did not fully appreciate the underlying risks in the financial planning business."
Credit quality metrics remain near cyclical lows.
According to Maxsted, credit quality metrics remain near cyclical lows across both businesses and consumers. He advised that less than 1% of the bank's mortgage loans are more than 90 days in arrears at present. And that for a portfolio with an exposure of more than $550 billion, the losses in 2018 were just $86 million.
Remuneration outcomes.
Mr Maxsted acknowledged that shareholders are likely to vote against its executive remuneration resolution. He advised that "based on votes already received, more than half will be against this resolution. This means we will incur a first strike. This sends a strong message to the Board." As a result, in the year ahead the Westpac board will review its reward frameworks.
More challenges ahead.
CEO Brian Hartzer appears cautiously optimistic on 2019 despite acknowledging that there will be challenges. He said: "while 2018 was a challenging year, and 2019 no doubt will continue to bring its own challenges, I believe Westpac is very much on the right path."
Before adding that: "Our balance sheet has never been stronger, we have an excellent customer franchise, a clear strategy to build a simpler, more efficient, and low‐risk business, and what I believe to be the strongest management team in the sector. As a result I believe we are well on the way to delivering good value and returns for shareholders, and doing it in a way that you can remain proud of your investment in Westpac."
Should you invest?
While I thought this was a reasonably uneventful annual general meeting, I felt Mr Hartzer's comments were positive and agree with his view that the bank is well-positioned to deliver decent returns for shareholders.
In light of this, I continue to believe it would be a good investment at current levels alongside Australia and New Zealand Banking Group (ASX: ANZ) and even National Australia Bank Ltd (ASX: NAB).
