In 2021, the Westpac Banking Corp (ASX: WBC) share price has performed better than any of the other big four banks. Since the beginning of January, its value has appreciated by a tidy 29.3%.
In comparison, Australia and New Zealand Banking GrpLtd (ASX: ANZ) is up 25.2%, National Australia Bank Ltd. (ASX: NAB) is 16.6% higher, and the Commonwealth Bank of Australia (ASX: CBA) share price is only 5.8% greater.
Today, at the time of writing, the Westpac share price is up 0.2%. By contrast, the S&P/ASX 200 Index (ASX: XJO) is 0.34% higher.
Let's take a closer look at some of the major stories this year that have had a material impact on the Westpac share price.
What's affected the Westpac share price in 2021?
First quarter FY21 results
After revealing an approximate 200% growth in net profits after tax for the quarter, compared to the previous reporting period at the end of FY20, the Westpac share price jumped 5%. Profits grew because of an impairment benefit of $501 million from improved credit quality, stronger economic outcomes and a better economic outlook.
In the report, the bank reported cash earnings of nearly $2 billion – up 54% excluding notable items. Notable items included provisions for AUSTRAC proceedings, refunds, payments, costs and litigation, write-down of intangibles and asset sales and revaluations.
Of course, it should be noted Westpac's revenues and profit margins in FY20 were severely impacted by the economic effects of the COVID-19 pandemic. By the time of the update, Westpac reported consumer delinquencies over 90 days, and mortgage deferrals were down compared to the previous quarter.
Bullish broker ratings
Another factor influencing the strong growth in the Westpac share price are the buy ratings placed on the bank by leading stockbrokers.
Citi, JP Morgan, and Goldman Sachs all have buy ratings on Australia's second-largest bank by market capitalisation. JP Morgan expects the Westpac share price to hit a 52-week high of $27.50.
Projected dividend yield
CommSec is projecting Westpac to pay a fully franked dividend of $1.09 per share. In FY20, Westpac only paid a dividend of 31 cents per share.
JP Morgan is even more optimistic. The broker expects Westpac to pay an even larger dividend of $1.32 per share. If that were the case, it would be excellent news for the Westpac share price.
APRA finishes investigation into Westpac
In early March, the Australian Prudential Regulation Authority (APRA) announced it was closing its 3-month investigation into the bank over allegations it had breached anti-money laundering and counter-terrorism laws. The government authority found no evidence the bank had breached these laws. The news saw a lift in the Westpac share price.
It did, however, impose several restrictions on the bank. These include a court enforceable undertaking to implement an integrated risk governance remediation plan and a $1 billion operational risk capital add-on.
New Zealand demerger
In response to enquiries by the Reserve Bank of New Zealand (RBNZ) over risk governance and liquidity risk management, Westpac announced it was looking into possibly demerging its New Zealand arm from its main operations.
Goldman Sachs reviewed the impacts of a potential demerger and still set a price target of $25.94. That's 2.16% higher than the current Westpac share price.
