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.
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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.
