The Westpac Banking Corp (ASX: WBC) share price will be in focus on Tuesday after the bank revealed a $1.3 billion hit to its half-year earnings.
The hit – born from notable items, including a loss on the sale of Westpac Life Insurance – will dint the S&P/ASX 200 Index (ASX: XJO) bank's second-half net profit and cash earnings.
Westpac revealed the upcoming impact after the market closed on Monday. The bank's stock ended Monday's trade at $23.87.
Let's take a closer look at the news that might drive the Westpac share price on Tuesday.
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Westpac share price in focus on $1.3b impact
The Westpac share price could be one to watch after the bank announced its second-half results will include a significant dint.
Much of the $1.3 billion post-tax hit from notable items relates to the sale of its life insurance business.
The bank completed the sale of the business to a Dai-ichi Life Group subsidiary for $900 million in August.
That saw Westpac recognise a $1.37 billion loss, $270 million of which impacted its financial year 2021 earnings. The other $1.1 billion will be recognised in its results for the second half of financial year 2022.
Other notable items resulted from:
- The sale of Advance Asset Management and successor funds transfer of BT's personal and corporate superannuation funds
- The sale of the bank's motor vehicle and its vendor finance businesses
- Shrinking the bank's corporate and branch footprint
- Higher provisions for customer refunds, associated costs, and litigation costs
Most of the notable items were previously disclosed to the market as divestments were announced.
They left a positive 12 basis points impact on the bank's common equity tier 1 capital ratio. The completion of the life insurance sale added 17 basis points, while the other notable items had a 5 basis point impact.
The $83 billion banking giant will release its full-year results on 7 November.
