Westpac Banking Corp (ASX: WBC) shares had a strong run in FY24, and the gains have extended into the current financial year.
The bank is set to release its FY24 earnings next Monday, August 19. I have no doubt that investors are keenly watching.
Westpac shares are currently trading at $29.48 apiece, more than 2% higher on the day and more than 5% higher over the past month.
The share price is also drifting towards its 52-week high of $29.94. Expectations are high leading into its FY24 earnings.
Let's see what the experts have predicted leading into its yearly numbers.
What to expect from Westpac's FY24 earnings
It's worth noting that it's not all about the share price when banks report each earnings season.
As one of the 'big four' Australian banks, Westpac's earnings – along with the other banking majors – provide a detailed insight into the state of the economy. Hear me out.
Banks lend to businesses and individuals, who then use that capital to make investments that either grow the economy or increase our wealth in the form of housing and other assets.
The pace of new loans, rate of delinquencies and bad debts, and total savings deposits are all critical factors specific to banks that suggest what's going on in the economy.
Westpac's upcoming earnings announcement also comes at a time of mixed sentiment among analysts about its shares.
Analysts at Goldman Sachs have set a bearish price target of $24.10 per share, indicating a potential downside of around 18% at the time of writing.
According to an updated note in July, the broker projects earnings per share (EPS) of $1.92, a 6.5% decrease from FY23.
It also forecasts net interest income (NII) of $18.6 billion, with a net interest margin (NIM) of 1.92%.
These figures would pull a return on equity (ROE) of 9.3% if proven correct.
Goldman Sachs isn't alone in its cautious stance. Other major brokers, including Citi, JP Morgan and UBS, have issued sell ratings ahead of Westpac's earnings.
These estimates could imply a softer set of earnings from Westpac in FY24 compared to last year. We shall see who is correct and who is not.
Dividends are a highlight too
Despite the cautious share price outlook, Westpac's dividend will be the talk for many investors.
Over the past 12 months, Westpac has paid fully franked dividends totalling $1.62 per share, translating to a yield of around 5.5% at the current share price.
Goldman Sachs is forecasting a fully franked final dividend of 75 cents per share in the FY24 report.
This would bring the final payment to $1.65 per share under its estimates.
However, looking ahead to FY25, the forecast suggests a slight reduction in dividends, with Goldman predicting a payout of $1.50 per share.
While this is lower than the current level, it would still represent a healthy yield of approximately 5.1% at the current share price.
Westpac shares final takeaway
As Westpac prepares to report its FY24 earnings, investors will want to know whether the bank can meet expectations.
The stock is up more than 35% in the past 12 months.
