The Westpac Banking Corp (ASX: WBC) share price caught a bid on Monday after the bank posted its third quarter FY24 earnings update.
It finished the session at $30.40 per share, more than 2% higher, and also hit a new 52-week high on the day.
This continues a longer trend of the bank's shares, where Westpac has been on a strong upward trajectory in 2024, having climbed 31% this year to date.
Here's what's got my attention after its latest earnings.
Strong fundamentals for Westpac shares
I think Westpac's latest quarterly update is worth discussing. Critically, the bank is investing for growth, and this is starting to pay off.
Australia's oldest bank posted net profit after tax of $1.8 billion during the period, up 6% year over year.
This increase was driven by a 1% uptick in net operating income, which reached $5.4 billion, and a 3 basis points improvement in net interest margin (NIM) to 1.92%, which may help Westpac's share price.
The bank also reported strong loan growth of $14.7 billion, which "outperformed the system".
While operating expenses increased, this was actually because the bank invested more money towards maintaining its competitive position and for growth.
In the wake of a high-interest environment, these results stand out because they show that the bank was still extremely busy during the quarter.
This resulted in a return on tangible equity (ROTE) of 11.3%, up nearly 80 basis points from the first half.
Brokers: Optimistic but cautious
Not all brokers were bullish on the Westpac share price leading into its Q3 numbers. Goldman Sachs and JP Morgan had negative views on the Aussie mortgage market, which they believe could hurt Westpac's earnings.
This is interesting because Westpac's numbers tell a different story. Both NIM and net profits were up with strong ROTE, which was against these brokers' expectations. This certainly has caught my attention.
Citi analysts also recognise the bank's improved NIM and revenue growth, even though they currently hold a sell rating on the stock.
The Westpac share price is also rated a sell by consensus of analyst estimates, according to CommSec.
This is one of the main reasons Westpac's earnings have piqued my interest.
Foolish takeaway
Westpac's solid performance in the third quarter of FY24 has certainly caught my interest. The bank's loan growth and improved NIM could be positive indicators for future earnings. Plus, they were ahead of broker expectations.
Going forward, I'll have to consider how Westpac's earnings compare with those of the other ASX banking majors for a full comparison.
Westpac shares are up 47% in the past 12 months.
