1 Nov 2021
Australia’s Westpac Shares Tumble as it’s Margins Take a Hit
The Index Today
Australia’s third largest bank, Westpac, saw its shares tumble on Monday after the company revealed to its Investors to expect upcoming cuts to its margins. The cash earnings of Westpac were recorded at A$5.35 billion for the current year with A$3.5 billion share buyback. However, the news led to shares declining 6% to an eighth month low along with higher expenses and more pressure on core earnings.
CEO Peter King stated, “Our underlying results are not where we want them to be, and we recognize we have more to do to become the high-performing company we aspire to be.” The company is in the financial recovery phase to replace its outdated software and programs which led to breaching of anti-money laundering laws earlier this year.
Regal Funds manager Mark Nathan said, “They are on a far better footing going forward, but the market has focused on the cost of rectification rather than the benefits that flow from this. I think the markets expects most of the cost benefit to flow through in 2023 and 2024, rather than through the 2022 fiscal year.”
As the Australian economy is in rebound, the rising prices of homes has managed to push Westpac’s mortgage book up by 4% after seeing a decline during the pandemic. The CEO has also stated that the company will experience more pressure on margins due to growing competition. Westpac is hoping to see a high demand for credit despite rising home prices. Westpac has declared its share dividend of around A$0.60 per share.
©Photo: AP Photo/Rick Rycroft, FIle