Westpac Banking Corp (ASX: WBC) shares will be on watch on Monday morning.
That's because the banking giant has just released its full year results.
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Westpac shares on watch after results release
Here's a quick summary of its financial performance and key metrics:
- Net interest income increased 3% to $18.9 billion
- Net interest margin (NIM), excluding notable items, decreased 1 basis point to 1.95%
- Non-interest income decreased 15% to $2.84 billion
- Operating expenses increase 7% to $10.94 billion
- Net profit down 3% to $6.99 billion
- Fully franked final dividend of 76 cents per share
- $1 billion share buyback
What happened during FY 2024?
Westpac had a solid year given the heightened competition in the mortgage market, delivering a net profit of $6.99 billion. This represents a modest 3% decline on the prior corresponding period and is a touch short of what Goldman Sachs was forecasting for the bank.
The main drag on its performance was the Consumer segment. Its net profit decreased 17% to $2.18 billion. This was despite net loans increasing 4% and deposits growing 8%. Management advised that this reflects intense mortgage competition and a 1% increase in operating expenses. Though, it is worth noting that its financial performance recovered in the second half, with net profit up 6% on the prior corresponding period.
The Business & Wealth segment was the star of the show, recording a 13% increase in net profit to $2.36 billion. This reflects net loan growth of 7% with business lending increasing by 9% due to strong growth in its target industries of agriculture, health and professional services. Expenses rose 4% year on year.
Things were also positive across the Tasman with the New Zealand segment posting a 10% increase in net profit to NZ$1.06 billion. A 3% increase in operating income reflected growth in lending and a higher net interest margin, while a 6% increase in operating expenses was driven by increased technology costs, software amortisation and inflationary pressures.
Finally, the Institutional Bank segment recorded a 2% increase in net profit to $1.37 billion. Management advised that a 6% rise in operating income reflects higher lending and deposit revenue, while a 10% rise in operating expenses was due to higher resourcing to support growth, as well as software amortisation from technology investments.
This allowed the Westpac board to declare a fully franked final dividend of 76 cents per share. This brought total dividends for the year to $1.51 per share, which was towards the upper end of its payout range.
Including the special dividend paid with its interim dividend, Westpac rewarded shareholders with a total payout of $1.66 per share. This was well short of Goldman's estimate of $1.80 per share.
Ready for 'growth and success'
Westpac's outgoing CEO, Peter King, was pleased with his final set of results and believes the bank is well-placed for the future. He said:
Our disciplined performance in FY24 has set Westpac up for growth and success. We've significantly improved our customer service, grown in key segments and delivered another financial result built on a solid balance sheet and capital position.
King also revealed that he is going out with a bang, announcing a $1 billion on market share buyback today. This is on top of a dividend increase. He adds:
Westpac's capital position is one of the strongest I've seen, allowing us to further increase the share buyback program by $1 billion. In addition, fully franked ordinary dividends increased by 6% this year with a final dividend of 76 cents per share. Total ordinary dividends for the year were 151 cents per share, towards the upper end of our payout range.
Commenting on his exit, King concludes:
After five years as CEO I'm pleased to hand the bank over in very good shape. Westpac is a simpler, stronger bank and we are better at managing risk. […] Following a period of simplification of the bank, I know our people are excited about the next phase of growth and I thank them for their support. I'm confident Westpac is positioned well for the future as it embarks on a new era under the leadership of Anthony Miller.
