The Westpac Banking Corp (ASX: WBC) share price is in focus after the bank recently reported its FY22 half-year result.
Could the big four ASX bank now be a smart opportunity for investors to consider?
Before getting to what some investment experts may think, let's look at what Westpac reported for the first six months of FY22.
Earnings recap
There were two sets of comparisons that Westpac told investors about on Monday – how the FY22 first half compared to the second half of FY21 and the first half of FY21. And it appears the results were well received, with the Westpac share price rising 3.23% on the day.
Compared to the first half of FY21, the HY22 statutory net profit after tax (NPAT) fell by 5% to $3.28 billion and cash earnings declined by 12% to $3.1 billion. Revenue dropped 8% and costs declined 10%.
Compared to the second half of FY21, the statutory net profit was up 63% to $3.28 billion. Cash earnings increased 71% to $3.1 billion. Revenue dropped 3% and costs fell 27%.
Westpac's board declared a fully franked interim dividend of 61 cents per share. That compares to the FY21 final dividend of 60 cents per share and 58 cents per share for the FY21 interim dividend.
The big four ASX bank said that "asset quality has improved and most credit quality metrics are back to pre-COVID levels, however, we increased overlays in our provisions for supply chain issues, inflation, expectations of higher interest rates, and recent floods".
Westpac has reduced its headcount by more than 4,000 as it tracks towards the target of an $8 billion cost base by FY24.
Over the half, total lending rose by $8.8 billion and total deposits increased by $20.6 billion.
The company said its Australian mortgage portfolio grew off the back of owner-occupied mortgages, but it wants to lift performance in investor lending. It also said that it has built on its momentum in business lending.
Westpac's net interest margin (NIM) declined from 1.99% at the end of the second half of FY21 to 1.85% in the first half of FY22.
In terms of the outlook, Westpac noted that "demand for housing has already shown some signs of easing and rising interest rates are expected to contribute to a moderation in house prices next year".
It also reminded investors that as interest rates rise, it is coming from a low base and the bank is already assessing loan applications on higher rates.
Is the Westpac share price a buy?
The broker UBS thinks that it is, with a price target of $27. That implies a potential rise of around 12% over the next year on the current Westpac share price of $24.11. Its cost reduction plan and asset quality were positives.
UBS thinks Westpac is valued at a decent discount to its big four ASX bank rivals of Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), and Australia and New Zealand Banking Group Ltd (ASX: ANZ).
However, Credit Suisse is currently 'neutral' on the bank, with a price target of $24.40. It said there is a question of whether the big bank will be able to reach its cost-cutting goals considering the inflation environment.
