Why are Westpac shares leaping ahead of rival ASX 200 bank stocks on Monday?

ASX 200 investors have been poring over Westpac's quarterly results today.

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Westpac Banking Corp (ASX: WBC) shares are racing ahead of rival S&P/ASX 200 Index (ASX: XJO) bank stocks today.

In early afternoon trade on Monday, the Westpac share price is up 2.4% at $25.17 a share.

Here's how the other big four ASX 200 bank stocks are performing at this same time:

  • Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares are down 0.1%
  • National Australia Bank Ltd (ASX: NAB) shares are down 0.4%
  • Commonwealth Bank of Australia (ASX: CBA) shares are up 0.6%

For some broader context, the ASX 200 is up 0.1%.

Here's why Westpac is, well, leading the pack.

What's boosting Westpac shares today?

Westpac stock is marching higher today following the release of the bank's quarterly update.

ASX 200 investors don't appear put off by the slip in the bank's net interest margin (NIM), nor its profits coming in below consensus expectations.

Core NIM dropped 0.04% from the second half of 2023 to 1.80%. And net profit was down 6% to $1.5 billion.

Investors are likely shrugging off these dips because they were already largely baked into Westpac shares. Management had previously cautioned the bank was facing persistent inflationary headwinds. And they forecast a contraction in NIM amid stiff, ongoing competition in the lucrative Aussie mortgage markets.

It's also worth noting that, excluding notable items, net profit for the three months was $1.8 billion, in line with 2H 2023. And management highlighted that the quarterly profit headwinds related solely to hedge accounting which they said "will reverse over time".

Of some concern for Westpac shares, high interest rates and inflation do appear to be impacting Aussie households and some of the bank's loan books. Westpac reported credit impairment provisions of $5.1 billion at the end of 2023. That came in $1.5 billion above the expected losses of the bank's base case scenario.

But Westpac shares could be in for some more tailwinds, with only 31% of the bank's $1.5 billion on market share buyback completed. When a company buys back its shares, that leaves fewer shares available and tends to support the share price.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. 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.

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