Westpac share price falls on $173m profit hit

Here's a key update ahead of the banking giant's results release next month.

| More on:
a man in a snappy business suit looks disappointed as he counts bank notes in his hand.

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

The Westpac Banking Corp (ASX: WBC) share price is falling on Thursday morning.

At the time of writing, the banking giant's shares are down almost 1% to $20.64.

Why is the Westpac share price falling?

Investors have been selling the banking giant's shares today after the company released an update on the one-off items it expects to include with its upcoming FY 2023 results.

According to the release, Westpac's reported net profit after tax in FY 2023 will be reduced by a total of $173 million due to notable items.

While this is certainly a large number, it is significantly lower than in FY 2022. For that financial year, Westpac's notable items came in at $874 million.

What are the items?

Westpac explained that its one-off notable items for FY 2023 include the following:

  • Sale of the Advance Asset Management business – $256 million profit.
  • An increase in provisions for customer refunds, repayments, associated costs and litigation including costs associated with the one-off levy for the Commonwealth's Compensation Scheme of Last Resort – $176 million loss.
  • Restructuring costs associated with organisational simplification and the discontinuance of specialist businesses – $140 million loss.
  • The write-down of assets and costs related to reducing our corporate and branch footprint – $87 million loss.
  • Unrealised fair value gains and losses on economic hedges and net ineffectiveness on qualifying hedges – $26 million loss.

In respect to the Westpac's all-important common equity tier 1 (CET1) capital ratio, the bank expects these one-offs to impact it by 4 basis points.

Westpac will be kicking off reporting season in the banking sector with the release of its FY 2023 results next month on 6 November.

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

Friends at an ATM looking sad.
Bank Shares

3 ASX 200 bank stocks making headline news this week

These three ASX 200 banks were back in the news this week.

Read more »

a dog sleeping with cucumbers on his eyes
Dividend Investing

Buy 194 shares in this top ASX 200 dividend stock for $873 in passive income

This top ASX 200 dividend stock boosted its passive income payments after delivering $10.2 billion in FY 2023 profits.

Read more »

A woman has a thoughtful look on her face as she studies a fan of Australian 20 dollar bills she is holding on one hand while he rest her other hand on her chin in thought.
Bank Shares

Should I buy ANZ shares for the 7% dividend yield?

ANZ is standing out from the banking pack right now.

Read more »

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

Playing fair: Could the big four ASX bank shares be in hot water again?

A federal Senate inquiry into bank branch closures in regional areas began today.

Read more »

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

Loan growth! Can CBA shares reach new highs?

No financial stock can bank on growth. Is CBA regaining momentum?

Read more »

A businesswoman holding a briefcase rests her head against the glass wall of a city building, she's not having a good day.
Bank Shares

Why were ANZ shares the worst performing major bank in November?

It wasn’t a wonderful month for ANZ.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Bank Shares

How CBA shares are diversifying outside of the great Aussie dream

Commonwealth Bank of Australia is looking for ways to make money beyond home buyers.

Read more »

ecommerce asx shares represented by santa doing online shopping on laptop
Bank Shares

Can Bank of Queensland shares reach $6 by Christmas?

Is it possible for this regional bank to deliver strong returns?

Read more »