The Westpac Banking Corp (ASX: WBC) share price is under pressure on Thursday.
In morning trade, the banking giant's shares are down 2% to $39.37.
This compares unfavourably to the performance of the ASX 200 index, which is up 0.75% at the time of writing.
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Why is the Westpac share price falling?
Today's decline could actually be classed as good news for the shareholders of Australia's oldest bank.
That's because today's weakness signifies that pay day is coming for eligible Westpac shareholders.
This morning, the Westpac share price is underperforming in response to trading ex-dividend for the bank's upcoming final dividend payment of FY 2025.
When a company's shares go ex-dividend, it means that the rights to an upcoming dividend payment are now locked in.
As a result, any investors that are buying Westpac's shares from this point on will not be entitled to receive this payout when it is distributed to shareholders. Instead, the rights to the upcoming dividend will remain with the seller. This applies even if they no longer hold the shares on the payment date.
Given that a dividend is part of a company's valuation, its share price will tend to drop in line with the value of the payout on the ex-dividend date.
After all, new buyers of its shares don't want to pay for something they won't receive.
The Westpac dividend
Earlier this week, Westpac released its highly anticipated full-year results for FY 2025 and declared its latest dividend.
In case you missed it, 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.
But with its operating expenses increasing 9% to $11.916 billion (6% excluding restructuring costs of $273 million), Westpac's profits declined year on year.
The bank's pre-provision profit was down 2.5% to $10.548 billion and its net profit after tax was down 1% to $6.989 billion.
However, despite this earnings decline, the Westpac board elected to increase its dividend modestly to a fully franked $1.53 per share.
This comprises an interim and special dividend totalling 76 cents per share and a final dividend of 77 cents per share.
It is the latter that eligible shareholders can now look forward to being paid. Just like last year, Westpac has named 19 December as its payment date, which means shareholders will receive their payout just in time for some last-minute Christmas shopping.
