The Westpac Banking Corp (ASX: WBC) share price will be one to watch closely today.
This follows the release of an update on the banking giant’s performance during the third quarter.
What happened in the third quarter?
While no details on its earnings have been provided, Westpac gave investors a picture of its asset and credit quality. At the end of June, Westpac’s CET1 ratio stood at 12%. While this was down from 12.3% at the end of March, this was due to its dividend payment and higher risk weighted assets (RWA). The latter increased 2% over the three months to $8.5 billion.
However, on a pro forma basis, Westpac’s CET1 ratio is 12.5%. Positively for shareholders and the Westpac share price, its Board have stated that this excess capital (and franking credits) means it will consider a further return of capital. An update on this matter is expected to be made with its FY 2021 results.
Another positive was that its stressed assets to total committed exposures (TCE) reduced during the quarter. It now stands at 1.51%, down 9 basis points over the period. Also falling were its mortgage 90+ day delinquencies, which fell 9 basis points to 1.11% in Australia.
The bank also revealed a relatively small number of new repayment deferrals related to recent lockdowns and an Individually Assessed Provision of $868 million. The latter relates largely to the Forum Finance alleged fraud.
Also of note, was that the bank revealed that its Australian mortgages and Australian business lending grew at 1x system during the quarter.
Finally, looking ahead, management has confirmed key considerations that were indicated with its first half results. This includes its second half margins being lower half on half and its full year expenses being higher year on year excluding notable items.
Westpac share price performance
The Westpac share price has been a very strong performer in 2021. Since the start of the year, the banking giant’s shares have risen by a whopping 31%.
This means the Westpac share price has generated more than double the return of the ASX 200 over the same period.