The Westpac Banking Corp (ASX: WBC) share price has started the week in a positive fashion.
In morning trade, the banking giant’s shares are up 3% to $24.57.
Why is the Westpac share price charging higher?
The Westpac share price is charging higher on Monday after investors responded positively to the bank’s half-year results.
For the six months ended 31 March, Westpac reported an 8% year on year decline in revenue to $10,230 million and a 12% reduction in cash earnings to $3,095 million. This allowed the bank to pay a 61 cents per share interim dividend.
While this was a touch lower than what Goldman Sachs was expecting, it was ahead of consensus estimates. The Visible Alpha consensus estimate was for first-half cash earnings of $2.8 billion, with an interim dividend of 59 cents per share.
Also supporting the Westpac share price was a stronger than expected net interest margin (NIM), which came in at 1.85%.
Goldman commented: “WBC’s 1H22 NIM was down 14 bp hoh to 1.85% (ex Markets at 1.70%) and was higher than our expectations (GSe, -17 bp to 1.82%).”
But perhaps the biggest driver of the Westpac share price today is the bank’s reiteration of its cost reduction plans.
With both Australia and New Zealand Banking Group Ltd (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB) abandoning their cost reduction targets last week, many thought Westpac would be forced to follow suit. Particularly given how the market was already very sceptical over its plans.
However, this morning management reiterated its target of reducing its cost base down to $8 billion by FY 2024. This compares to operating costs of $13.3 billion in FY 2021. Though, those numbers include $2.3 billion of notable items.
Time will tell if Westpac gets there, but it certainly made great strides in doing so during this half. Management reported a 10% or $624 million reduction in operating expenses to $5,373 million.