The bank announces $1.5bn share buyback and increased dividend
Westpac Group has reported improved return on equity, higher earnings per share, and increased net profit for the 2023 financial year amid rising interest rates, driven by growth in deposits, mortgages, and institutional banking.
In the 12 months to Sept. 30, the ASX-listed big bank’s net income jumped 26% to $7.2 billion from the prior year, despite a 7% dip in its consumer division, which has just over one-fifth of Australian mortgages, and was contributed by a surge in its smaller business and institutional banking segments, which were up 77% and 54%, respectively.
See graph below for the key financial data for the full-year to end-September, when compared to the same period last year:
“A strong banking sector is vital for a resilient economy and Westpac’s balance sheet is the strongest I’ve seen in my 29 years at the bank,” Westpac Group CEO Peter King (pictured above) said. “Capital and liquidity are above regulatory requirements and credit quality is resilient. Margins increased two basis points and have been well managed through a period of intense mortgage competition.”
King said the bank has simplified its portfolio and restructured its divisions, to focus on growth, returns, enhancing customer experience, while rebalancing investment between risk, growth, and productivity, to support its strategy.
“Our expenses are down 1% but we recognize there’s more work to do as we seek to lower our cost-to-income ratio relative to peers,” he said. “Impairment provisions have increased to position the bank’s balance sheet appropriately for the uncertain economic outlook.”
The Westpac boss said the latter half of 2023 posed greater challenges for Westpac and the broader industry and that this will likely persist into 2024.
“Looking ahead, there are some uncertainties in the economic outlook,” King said. “While inflation is coming down, challenges remain, including volatile energy prices and geopolitical uncertainty due to conflict in Europe and the Middle East.
“In Australia, employment and productivity are key measures to watch. The jobs market has proved robust but will be tested through 2024. Consumer sentiment remains weak but there are glimmers of hope with some cost pressures starting to ease for businesses, which in time should flow through to prices paid by consumers.”
He said the big bank is generally optimistic about the economic outlook for the next year and believes Westpac is well-positioned to expand its business and assist customers in need.
In an ASX announcement, Westpac said it will commence a $1.5 billion share buyback. The bank also declared a final dividend of 72 cents per share, up 14% from the 64 cents the prior year.
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