Owners of Westpac Banking Corp (ASX: WBC) shares got a good insight into the performance of the ASX bank share when it released its FY25 half-year result. Investors may be wondering how much further profit could grow in the coming years.
Profit generation is key because it pays for dividends and helps justify a higher share price, if profit is growing.
It's not guaranteed that profit will grow, and analyst projections won't always be accurate, particularly if unexpected events occur. But, I think forecasts are useful to know and can help us understand what the business may be able to achieve in the next few years.
Let's take a look at what the broker UBS is estimating for Westpac shares.
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FY25
The business is more than halfway through FY25, so it's not too long to go until investors get to see the full-year result. The half-year result was "largely in line" with what analysts were expecting at the cash net profit level, though the dividend per share of 76 cents was lower than the 80 cents per share.
UBS is expecting Westpac's net interest margin (NIM) forecasts to be downgraded due to anticipated rate cuts. UBS expects the RBA cash rate to eventually get to 3.10%. The broker lowered its expected credit losses because of the improved loan quality.
The broker said:
Even after a soft dividend, in our view, Westpac is the most credible re-rate story among the large Australian banks in a fully priced banking sector. The bank has a clear cost out path, which the market remains sceptical on, while revenue pressure might reduce as the benefits of the strategic pivot to business & institutional banking occur.
For FY25, UBS is forecasting that Westpac could generate reported net profit of $6.7 billion.
FY26
The broker is expecting profit to improve in the 2026 financial year, which could encourage investors.
Westpac is projected to generate $6.95 billion of net profit in FY26, which would represent a year-over-year increase of 3.6%. That's not fast growth, but it's an improvement nonetheless for Westpac shares.
FY27
The 2027 financial year is expected to be an even stronger year compared to FY26.
Westpac's reported net profit is forecast to increase again to $7.3 billion, which would represent a year over year increase of 5.3%.
FY28
The 2028 financial year could see yet another improvement for owners of Westpac shares.
UBS is projecting that the ASX bank share's net profit could increase by another 6.25% to $7.8 billion.
FY29
The final financial year of this series of projections is predicted to be the best of the lot.
Of course, forecasts are not guaranteed to become reality, but it shows that the company could be headed in the right direction.
UBS is projecting that Westpac's net profit could increase by 6.2% to $8.27 billion. Pleasingly, the broker is also expecting the ASX bank share's annual dividend per share to rise every year between FY26 and FY29.
