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MarketScreener Homepage  >  Equities  >  Australian Stock Exchange  >  Westpac Banking Corporation    WBC   AU000000WBC1

WESTPAC BANKING CORPORATION

(WBC)
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End-of-day quote. End-of-day quote Australian Stock Exchange - 01/15
21.35 AUD   +1.52%
01/11Australia shares gain as markets bank on U.S. stimulus hopes
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2020WESTPAC BANKING : Dividend/Distribution - WBCPE
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2020WESTPAC BANKING : Dividend/Distribution - WBCPF
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Westpac hobbled by spending needs as Australian banks adjust to pandemic economy

11/12/2020 | 11:46pm EST

SYDNEY, Nov 13 (Reuters) - Westpac Banking Corp lags rivals as its dated systems is forcing it to spend, rather than save, while profit margins are eroded by record-low interest rates, investors said after Australia's biggest banks issued earnings and trading updates.

A sprawling organisation, aging software and convoluted procedures have been Westpac's main enemy, investors said, leading to record fines due to breaches of anti-money laundering law and market-share losses in mortgages, its main product.

That has left the 203-year old lender prioritising costly restructuring and system upgrades over lending growth.

Westpac's cheap stock makes it attractive to investors. Still, few are convinced of a quick price rise considering the central bank has cut interest rates three times to aid post-pandemic economic recovery, squeezing banks' interest margins.

"The question the market is asking itself is: is it cheap enough yet?" said portfolio manager Matthew Ryland at Greencape Capital, an investor in all of Australia's "Big Four" banks.

Westpac has over A$900 billion ($650 billion) in assets and for years was the second-largest bank by market value. Having seen its share price fall 28% since the breaches surfaced a year ago, it was passed last month by National Australia Bank Ltd (NAB).

The bank's stock is now worth 0.89 times its book value, the second-lowest of the Big Four, showed data from Refinitiv Eikon. By comparison, the multiple for leader Commonwealth Bank of Australia (CBA) is 1.7.

"Westpac had a terrible year but there's maybe some upside relative to the other banks," said Hugh Dive, chief investment officer at Atlas Funds Management, which also owns Westpac stock.

At its annual earnings briefing, Westpac said it was working to recover market share in mortgages after a cautious attitude combined with inefficiency sent prospective borrowers elsewhere.

New management since and a cost-focused strategy scheduled for next May has also given hope of revival, albeit gradual.

"Westpac is 12 to 18 months behind peers in terms of getting a grip on its cost-out program," said Greencape's Ryland.

Westpac declined to comment.

UBS, which has a "buy" recommendation on Westpac stock, in a client note said all banks have to spend on IT, compliance and other business upgrades because of COVID-19, but Westpac's cost challenge was bigger.

The average recommendation on Westpac stock of 14 analysts is 2.5, where 2 is "buy", 3 is "hold" and 4 is "sell".

Their top pick is NAB at 2 followed by Australia and New Zealand Banking Group Ltd at 2.1, Refinitiv Eikon data showed.

CBA, widely regarded as having better cost control and IT infrastructure, is rated 3.4, reflecting its more expensive price. ($1 = 1.3845 Australian dollars) (Reporting by Paulina Duran in Sydney; Editing by Christopher Cushing)


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 0.24% 24.66 End-of-day quote.8.63%
COMMONWEALTH BANK OF AUSTRALIA -1.10% 85.38 End-of-day quote.3.98%
NATIONAL AUSTRALIA BANK LIMITED 1.51% 24.14 End-of-day quote.6.81%
UBS GROUP AG -0.44% 13.465 Delayed Quote.7.98%
WESTPAC BANKING CORPORATION 1.52% 21.35 End-of-day quote.10.22%
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More news
Financials
Sales 2021 20 101 M 15 482 M 15 482 M
Net income 2021 5 223 M 4 023 M 4 023 M
Net Debt 2021 - - -
P/E ratio 2021 15,2x
Yield 2021 4,24%
Capitalization 77 795 M 60 045 M 59 920 M
Capi. / Sales 2021 3,87x
Capi. / Sales 2022 3,85x
Nbr of Employees 36 849
Free-Float 99,6%
Chart WESTPAC BANKING CORPORATION
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Westpac Banking Corporation Technical Analysis Chart | WBC | AU000000WBC1 | MarketScreener
Technical analysis trends WESTPAC BANKING CORPORATION
Short TermMid-TermLong Term
TrendsBullishBullishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 15
Average target price 21,80 AUD
Last Close Price 21,35 AUD
Spread / Highest target 26,5%
Spread / Average Target 2,11%
Spread / Lowest Target -29,7%
EPS Revisions
Managers and Directors
NameTitle
Peter Francis King Chief Executive Officer, MD & Director
John McFarlane Chairman
Scott Collary Chief Operating Officer
Michael Rowland Chief Financial Officer
Peter Ralph Marriott Independent Non-Executive Director
Sector and Competitors