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    WBC   AU000000WBC1

WESTPAC BANKING CORPORATION

(WBC)
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Australian banks FY21 earnings seen jumping 79%, outlook cautious

10/26/2021 | 06:17pm EST

* ANZ, Westpac, NAB to report FY21 earnings of A$18 bln, up 79%

* High share prices leave them vulnerable to disappointments

* ANZ opens bank reporting season on Oct. 28

SYDNEY, Oct 27 (Reuters) - Three of Australia's largest banks are expected to report a 79% jump in earnings from Thursday, fuelled by a less than expected hit from the global pandemic and a red-hot property market that has driven lending volumes.

Going forward, regulatory intervention to cool home loan growth and cost pressures could spoil the party, analysts and investors said.

Starting with Australia and New Zealand Banking Group (ANZ) on Thursday, and followed by Westpac Banking Corp on Nov 1. and National Australia Bank on Nov. 9, the lenders are expected to deliver A$18.1 billion in cash earnings for the year ending September, according to analysts polled by Reuters.

That is up from A$10.1 billion a year earlier, when impairment charges tripled and credit demand halted at the height of the COVID-19 pandemic.

"Loan balance growth in the past year is certainly expected to be a positive," BofA Securities banking analyst James Ellis said. "However, it'll probably be a more challenging environment for new lending growth."

Unprecedented fiscal and monetary policy support has helped revive Australia's economy and bank earnings, even as lockdowns in Sydney and Melbourne interrupted growth but did nothing to stop a 20% debt-fuelled surge in house prices.

With loan growth far outstripping growth in incomes, Australia's prudential watchdog this month began tightening home loan rules, in a move expected to start curbing lending volumes.

Australia's largest lender, Commonwealth Bank, follows a different fiscal calendar and in August announced a whopping A$7 billion capital return to investors at its earnings release.

The recovery and the extra capital that is yet to be returned to shareholders has helped drive a doubling in the share price of the Big Four banks, leaving them vulnerable to small disappointments.

Westpac is expected to announce a A$3 billion to A$4.5 billion buyback on Nov. 1, along with cash earnings of A$5.5 billion, double those of a year earlier.

Potentially higher IT and staff expenses or a perceived lack of discipline in pursuing lower costs could also hurt bank shares, which have doubled since their 2020 lows, investors and analysts said.

"There's reasonably good sentiment from the reopening, but share prices seem to still be driven mainly by bad things not materialising rather than a structurally better outlook," said Matthew Ryland of Greencape Capital, a bank investor. "Valuations are pretty full."

($1 = 1.3398 Australian dollars) (Reporting by Paulina Duran in Sydney; editing by Richard Pullin)


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
COMMONWEALTH BANK OF AUSTRALIA -0.64% 93.18 End-of-day quote.13.48%
NATIONAL AUSTRALIA BANK LIMITED 0.37% 27.3 End-of-day quote.20.80%
WESTPAC BANKING CORPORATION -1.91% 20.52 End-of-day quote.5.94%
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Analyst Recommendations on WESTPAC BANKING CORPORATION
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Financials
Sales 2022 19 677 M 14 026 M 14 026 M
Net income 2022 5 356 M 3 818 M 3 818 M
Net Debt 2022 - - -
P/E ratio 2022 13,8x
Yield 2022 5,98%
Capitalization 75 190 M 53 349 M 53 595 M
Capi. / Sales 2022 3,82x
Capi. / Sales 2023 3,71x
Nbr of Employees 40 143
Free-Float 99,5%
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Westpac Banking Corporation Technical Analysis Chart | WBC | AU000000WBC1 | MarketScreener
Technical analysis trends WESTPAC BANKING CORPORATION
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TrendsBearishBearishNeutral
Income Statement Evolution
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Mean consensus HOLD
Number of Analysts 16
Last Close Price 20,52 AUD
Average target price 25,61 AUD
Spread / Average Target 24,8%
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Managers and Directors
Peter Francis King Chief Executive Officer, MD & Director
Michael Rowland Chief Financial Officer
John McFarlane Chairman
Scott Collary Chief Operating Officer
Leslie Wilson Vance Group Executive-Financial Crime & Compliance
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