Westpac shares tumble on Q3 profit miss

The market hasn't responded positively to Westpac's update.

| More on:

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

Westpac Banking Corp (ASX: WBC) shares are having a tough start to the week.

At the time of writing, the banking giant's shares are down 2% to $20.82.

This means the Westpac share price is now down 8.5% since the start of the year.

a young woman sits with her hands holding up her face as she stares unhappily at a laptop computer screen as if she is disappointed with something she is seeing there.

Image source: Getty Images

Why are Westpac shares falling today?

Investors have been hitting the sell button on Monday in response to the bank's third-quarter update.

For the three months ended 30 June, Westpac reported an unaudited net profit of $1.8 billion. This represents a 10% decline from the first-half quarterly average of $2 billion. Management revealed that this reflects resilient operating revenue, assisted by ongoing disciplined margin management.

As you might have guessed from the share price reaction, this has fallen short of the market's expectations. For example, according to a note out of Citi, its analysts were expecting a quarterly profit of approximately $1.9 billion.

What else?

Also heading lower was the bank's core net interest margin (NIM), which was down 4 basis points to 1.86%.

However, thanks to Treasury and Markets income increasing 2 basis points to 10 basis points and gains related to hedging of 10 basis points, Westpac's NIM was up 10 basis points on the first-half average to 2.06%.

Though, judging by the performance of Westpac shares today, it seems the market is more focused on its core margin.

Another item that may have caught the eye of investors was the bank's expenses, which have been heading higher. Inflationary pressures impacted expenses and led to higher supplier costs and salary and wages. This means that expenses so far in the second half of FY 2023 are up approximately 5% compared to the first half average.

All in all, a tough quarter for Australia's oldest bank.

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 no position in any of the stocks mentioned. 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 wad of $100 bills of Australian currency lies stashed in a bird's nest.
Dividend Investing

How many NAB shares do I need to buy for $10,000 a year in passive income?

NAB shares historically pay two fully-franked dividends every year.

Read more »

A woman looks questioning as she puts a coin into a piggy bank.
Bank Shares

Which ASX bank has the biggest dividend yield?

Bank shares are popular for income. Here’s which one currently offers the biggest dividend yield.

Read more »

Nervous customer in discussions at a bank.
Bank Shares

Why NAB shares are slipping today despite a major business reset

NAB shares drift lower amid broader pressure on the banking sector.

Read more »

A man in a suit smiles at the yellow piggy bank he holds in his hand.
Bank Shares

Westpac shares are climbing following UNITE update

The banking giant's UNITE strategy is gathering momentum.

Read more »

A woman wearing glasses has an uncertain look on her face as she bites her lips and holds her phone.
Bank Shares

ASX bank stocks: Buy, sell, or hold?

Here are the bank stocks to buy and the ones to avoid.

Read more »

Nervous customer in discussions at a bank.
Bank Shares

How have the ASX big four bank shares held up in March?

Here's what experts are expecting moving forward.

Read more »

Happy young woman saving money in a piggy bank.
Broker Notes

Up more than 17% since January, should you buy CBA shares today?

A leading analyst delivers his forecast for CBA’s fast-rising shares.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Opinions

3 reasons to buy NAB shares today

Here's why I think the ASX bank stock is still a buy.

Read more »