Westpac Banking Corp (ASX: WBC) shares started the week strongly on Monday.
The banking giant's shares climbed to 10-year high before ending the day almost 3% higher at $39.82.
This was driven by the release of the bank's FY 2025 results and the announcement of its final dividend.
What did Westpac announce?
As a reminder, Westpac reported a 3% increase in net interest income to $19.473 billion for the 12 months ended 30 September. Driving this growth was a 6% increase in loans and a 7% lift in customer deposits. The latter includes a 10% increase in consumer deposits.
And although persistent competition in lending and deposits meant that its net interest margin (NIM) eased 1 basis point to 1.94%, this was better than expected, with the consensus estimate at 1.93%.
However, with its operating expenses increasing 9% to $11.916 billion or 6% excluding restructuring costs of $273 million, Westpac's profits declined year on year. Its pre-provision profit was down 2.5% to $10.548 billion and its net profit after tax was down 1% to $6.989 billion for FY 2025.
Westpac dividend
Despite the profit decline, the Westpac board decided to reward its shareholders with an increased dividend in FY 2025.
Westpac declared a fully franked final dividend of 77 cents per share, bringing its full year dividends to 153 cents per share. This was an increase of 1% on the prior corresponding period.
Based on its current share price, this full year dividend equates to a yield of approximately 3.85%.
Commenting on the dividend, Westpac said:
We maintained a strong financial position with capital, funding and liquidity all above regulatory minimums. Fully franked ordinary dividends increased to 153 cents per share, including a final dividend of 77 cents per share. That equates to a full year ordinary dividend payout ratio of 76% of net profit, towards the upper end of our preferred payout range.
To be eligible for this dividend, investors need to own Westpac shares before they go ex-dividend later this week. That is due to take place on 6 November. After which, they can look forward to receiving this payout just before the Christmas break on 19 December.
What's next?
Brokers are yet to adjust their models to reflect today's result, so things could yet change, but the most recent consensus estimate was for an increase to a fully franked 158 cents per share in FY 2026.
Based on the current Westpac share price, this equates to a dividend yield of approximately 4%.
