It's a good time to consider whether the Westpac Banking Corp (ASX: WBC) share price is a buy after the ASX bank share recently announced its FY26 first-quarter update for the three months to 31 December 2025.
Westpac reported that it generated $1.9 billion of statutory net profit, which was 5% higher than the FY25 second half average. Excluding notable items, the underlying net profit was $1.9 billion, representing 6% growth.
Let's take a look at what broker UBS thought of the result and whether the ASX bank share is appealing.
Image source: Getty Images
UBS view on the result
The broker noted that the FY26 first-quarter result was not as well-received as peers in the ASX bank share space, despite cash net profit being 6.8% ahead of expectations.
UBS highlighted that revenue growth was underpinned by stronger lending, despite the net interest margin (NIM) declining by 1 basis point (0.01%) quarter over quarter.
The broker said that the ASX bank share's common equity tier 1 (CET1) was 12.31%, a reduction of 22 basis points (0.22%) compared to the second half of FY25, but this is expected to lift organically in the second quarter of FY26, as well as there being a boost (22 basis points) from the RAMS sale, giving Westpac capital flexibility.
UBS said costs were the standout, down 5% compared to the second half of FY25 (excluding notable items). Management are pursuing productivity savings of more than $500 million in FY26, with some of that driving UBS to increase its earnings per share (EPS) expectations for Westpac.
The broker noted that the bank's tilt towards business and institutional is continuing, with the overall company showing "strong momentum". Gross loans and advances (GLA) grew by around 10%, driven by institutional lending, and deposits increasing by 6.7% on an annualised basis.
UBS also said that the broader sector is improving, supported by credit growth, particularly in wholesale lending and stable asset quality
Based on the quarterly update, UBS increased the FY26 EPS estimate by 2.4%, grew the FY27 EPS estimate by 2% and decreased the FY28 EPS estimate by 1.3%.
Is the Westpac share price a buy?
UBS has a neutral rating on the ASX bank share, with a price target of $40. A price target is where analysts think the share price will go over the next 12 months. Therefore, UBS is suggesting that Westpac could slightly fall over the next year.
The broker forecasts that the business could deliver $2.15 of EPS in FY26, which translates into the ASX bank share trading at 19x FY26's estimated earnings, meaning that it's trading at a much higher earnings multiple than it has historically, according to UBS.
