Westpac shares are on the rise after the Australian bank reported a $1.5 billion net profit in the first quarter of 2024, which is a 6 percent decline from its average profit in the second half of 2023. Despite a decline, the bank revealed that this fall in unaudited net profit is solely due to notable items related to hedge accounting, which will reverse over time. CEO Peter King described the results as a “solid quarter” and stated that the bank is focused on maintaining a strong financial position.
Westpac’s shares are up 2.52 percent, while shares of Commonwealth Bank of Australia are up 0.65 percent, and National Australia Bank shares are down 0.24 percent. The bank mentioned in its investor presentation that it had a $490.9 billion Australian mortgage portfolio at the end of December 2023, with 67.5 percent owner-occupied and 31.3 percent investment property loans. The bank reported that their focus is on helping customers who are facing “high cost of living” pressures and making difficult choices to manage household budgets.
“We expect the economy to remain resilient, supported by low unemployment and healthy corporate sector balance sheets,” said Mr. King. He added, “The economic slowdown, combined with abating inflationary pressures, should provide scope for monetary policy to become less restrictive within the next year.” In addition to expecting a less restrictive monetary policy, Westpac reported an unaudited net profit of $1.8 billion, with a solid customer deposit grown and more positive results.
Westpac’s results have received positive reactions from analysts, with Citi analyst Brendan Sproules describing the results as “reassuring,” and E&P capital analyst Azib Khan noting “nothing too concerning on asset quality at this stage, and the capital position remains strong.”
On the other hand, Commonwealth Bank of Australia reported a profit fall, with a net cash profit after tax (NPAT) of $5 billion, down 3 percent compared to the prior corresponding half. CEO Matt Comyn said 2023 was challenging for many of the bank’s customers who are “finding it harder” to absorb cost of living pressures. National Australia Bank is due to report on Feb. 21, while ANZ is scheduled to report earnings in May. 7.