At the time of writing, the banking giant’s shares are up almost 1% to $25.31.
This leaves the Westpac share price trading just short of its 52-week high of $25.52.
What did Westpac announce?
Investors have been buying the bank’s shares this morning despite revealing that its half year profits would be hit by notable items.
According to the release, there are a number of notable items that will impact its profit for the period by a total of $282 million after tax. The release explains that these items will impact both its cash earnings and statutory net profit equally.
Among its most notable items are additional provisions for customer refunds, payments, associated costs, and litigation provisions of $220 million.
There is also a $115 million write-down of capitalised software and other intangibles, $56 million for ending its relationship with IOOF Holdings Limited (ASX: IFL), an $84 million write-down of goodwill related to Lenders Mortgage Insurance, and an accounting loss on sale in Westpac Pacific along with transaction costs and payments associated with divestments totalling $113 million.
As you might have noticed, the notable items listed above add up to far more than $282 million.
That’s because these losses were partly offset by net gains in a couple of its tech investments.
This could explain why the Westpac share price is pushing higher today despite the above.
In addition to the above, the bank has advised of changes in its software capitalisation policy.
Westpac has increased the threshold before a project is capitalised to $20 million (previously $1 million).
This policy has been applied from 1 October 2020 and will see the bank expense a higher portion of its investment spending from now on. However, the higher expense is not treated as a notable item and will have no impact to the carrying value of capitalised software at 30 September 2020.
Following today’s gain, the Westpac share price is now up 29% since the start of the year.