Own Westpac shares? What to expect from next week's FY22 results

Here's what to expect from Westpac's FY 2022 results next week…

| More on:
Young investor sits at desk looking happy after discovering Westpac's dividend reinvestment plan

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

All eyes will be on Westpac Banking Corp (ASX: WBC) shares on Monday.

That's because Australia's oldest bank is scheduled to release its full year results on that day.

Ahead of the release, let's take a look at what analysts are expecting the banking giant to report for FY 2022.

What is the market expecting from Westpac's FY 2022 results?

According to a note out of Goldman Sachs, its analysts expect the bank to report a 10.3% decline in total revenue to $18,866 million. This reflects reductions in net interest income, life insurance income, and wealth management income.

In respect to net interest income, Goldman is expecting a 19-basis points year over year decline in Westpac's net interest margin (NIM) to 1.85%. This will offset a 7.6% increase in its average interest earnings assets, driving a 2.2% reduction in net interest income to $16,350 million.

This is ultimately expected to lead to a 4% decline in cash earnings (before one-offs) to $5,140 million and a final dividend of 62 cents per share. The latter brings Westpac's full year dividend to $1.23 per share, up from $1.18 per share in FY 2021.

NIM on watch

One thing that the market will be watching closely on Monday is the bank's NIM.

Although Goldman expects Westpac's NIM to fall to 1.85% in FY 2022, recent cash rate rises mean that its margin outlook has improved materially. This bodes well for the bank given its growing interest earning assets.

Goldman is expecting Westpac's second half NIM to come in at 1.86%, after which it is forecasting an improvement to 1.96% in FY 2023.

As a result, commentary around the bank's exit NIM may prove to be the most important part of Monday's result. If the market believes it can hit 1.96% in FY 2023, the Westpac share price could respond very positively. Conversely, any downbeat NIM talk could weigh it down.

Are Westpac shares good value?

Goldman Sachs is very positive on Westpac's shares and has put them on its conviction list.

It currently has a conviction buy rating and $27.07 price target. Based on the current Westpac share price of $23.79, this implies potential upside of almost 14% for investors.

In addition, Goldman expects a fully franked 5.8% dividend yield in FY 2023, bring the total potential return closer to 20%.

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Bank Shares

A corporate female wearing glasses looks intently at a virtual reality screen with shapes and lights representing Block shares going up today
Bank Shares

Are Westpac shares a buy following the bank's big tech update?

Is now a good time to buy the banking giant's shares? Let's find out.

Read more »

Different Australian dollar notes in the palm of two hands, symbolising dividends.
Bank Shares

Own CBA shares? It's payday for you!

A dividend is heading to CBA shareholders’ bank accounts.

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Bank Shares

Are CBA shares really worth $120?

It has been a good year for ASX bank shareholders.

Read more »

a group of people sit around a computer in an office environment.
Bank Shares

Westpac shares push higher on $9.8b technology simplification plan

Westpac plans to spend big on technology to close the gap on its rivals.

Read more »

A worried woman looks at her phone and laptop, seeking ways to tighten her belt against inflation.
Economy

NAB boss issues dire prediction for Aussie economy

NAB’s CEO has issued a stark warning on the outlook for Australia’s economic growth.

Read more »

Contented looking man leans back in his chair at his desk and smiles.
Bank Shares

Own CBA shares? Here's the tech stock the banking giant just invested in

CBA has made an interesting investment. Here's what you need to know.

Read more »

A woman gives two fist pumps with a big smile as she learns of her windfall, sitting at her desk.
Bank Shares

ANZ shares charge higher on $57.5 million class action settlement news

ANZ shares have continued their positive run on Monday.

Read more »

Two people comparing and analysing material.
Bank Shares

Better buy: CBA or Westpac stock?

Which ASX bank share is a better buy?

Read more »