Westpac share price lower on mixed quarterly update

The market has given a lukewarm response to the latest from Australia's oldest bank

Key points
  • Westpac shares are in the red on Friday morning
  • This follows the release of the bank's first quarter update
  • Goldman Sachs sees positives and negatives in the update

The Westpac Banking Corp (ASX: WBC) share price is edging lower on Friday.

At the time of writing, the banking giant's shares are down 0.5% to $22.64.

A man in a suit looks serious while discussing business dealings with a couple as they sit around a computer at a desk in a bank home lending scenario.

Image source: Getty Images

Why is the Westpac share price in the red?

The Westpac share price is edging lower on Friday following the release of the bank's first quarter update.

Although the update didn't provide any profit or margin figures, it did give investors an idea of how Westpac is performing.

The bank revealed that its credit quality and capital position remain strong, with Australian 90+ day mortgage delinquencies falling five basis points to 0.7% and a CET1 ratio of 11.13%.

Westpac also revealed that its liquidity coverage ratio (LCR) was up 7 percentage points to 139%, its net stable funding ratio (NSFR) was up 1 percentage point to 122%, and its deposit to loan ratio came in 1.1 percentage points higher at 84%.

Broker reaction

Goldman Sachs has responded to the update and notes that there are both positives and negatives. It explained:

WBC has released its Dec-22 (1Q23) Pillar 3 update, which suggests WBC's asset quality was run-rating slightly better than what was implied by our prior 1H23E forecasts, while the CET1 ratio was broadly consistent. As we had expected, no earnings update was provided. However, the slightly lower than expected RWAs could imply that either i) earnings were slightly below, and/or ii) capital deductions were slightly higher than what was implied by our 1H23 forecasts.

Should you invest?

While not blown away by the update, Goldman remains positive on the Westpac share price and has reiterated its conviction buy rating with a price target of $27.74.

This implies potential upside of 22% for investors over the next 12 months.

Motley Fool contributor James Mickleboro has positions in Westpac Banking. 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. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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