The last 12 months has been a good time to be invested in major ASX bank shares, as the chart of the Westpac Banking Corp (ASX: WBC) share price below shows.
At the time of writing, a rise of around 20% in a year is clearly good news. However, the Westpac dividend has not made as much progress. In the 2025 financial year, Westpac's annual dividend was barely increased at all.
Considering it has a (historical) reputation for large dividends, we're going to take a look at how appealing an investment in the Westpac share price actually is for passive income.
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FY25 dividend payout
In FY25, the business decided to pay an annual dividend per share of $1.53, representing a year-over-year increase of 1%. This included a final dividend per share of 77 cents, which was also a 1% year-over-year increase.
At the time of writing, the final dividend alone represents a grossed-up dividend yield of 2.8%, including franking credits. The full-year dividend from FY25 represents a grossed-up dividend yield of 5.5%, including franking credits.
Those aren't bad yields, the full-year payout is a higher yield than what Westpac term deposits offer. However, the ASX bank share's dividend yield is not as appealing as it used to be because of the higher Westpac share price.
The higher a share price goes, the lower the dividend yield becomes (unless payout growth matches share price growth).
On the dividend income alone, I wouldn't call the Westpac share price a buy, because it's not attractive compared to history.
Is this a good time to invest in the Westpac share price?
The FY25 report wasn't exciting viewing for shareholders – net profit declined 1% to $6.9 billion. After excluding notable items, net profit dropped 2%. This saw the return on tangible equity (ROTE), excluding notable items, decline 24 basis points (0.24%) to 11%.
These are not good metrics to see. It's interesting that the Westpac share price has risen so much despite the economic challenges it's facing with competition for deposits and loans, as well as higher expenditure.
In FY25, the net interest margin (NIM) declined 1 basis point (0.01%), while total loans grew 6% to $851.9 billion and total customer deposits increased 7%. The bank appears to have prioritised growth over maximising its NIM.
Westpac reported that its operating expenses rose by 9% to $11.92 billion. This figure included restructuring costs of $272 million. Excluding those costs, expenses rose by 6%, reflecting technology and UNITE program costs, increased software amortisation, and salary and wage growth, including an investment in more bankers. Expense growth is currently a significant headwind for profit growth.
Future financial years will show whether the expenditure helps Westpac's profit growth accelerate. I'm not convinced the Westpac share price is a good buy at this higher price/earnings (P/E) ratio. I'd rather invest in an ASX exchange-traded fund (ETF) or an individual stock that's more likely to deliver good earnings growth.
