Why Westpac shares are holding near record highs after a $75 million hit

Westpac Banking Corp (ASX: WBC) shares are edging higher on Tuesday after the banking giant released an update before market open.

In morning trade, the Westpac share price is up 0.31% to $42.72, leaving it up about 10% in 2026 and still sitting just below its late-February record high of $43.32.

By comparison, the S&P/ASX 200 Index (ASX: XJO) is 1.1% higher to 9,021 points.

This leaves the stock trading close to peak levels as the broader ASX recovers from renewed pressure and geopolitical uncertainty over the last few days.

It also reinforces how strongly the market has been backing the major banks this year as investors continue favouring earnings resilience, capital strength, and dependable dividends.

Half-year result will include a profit hit

According to the release, Westpac outlined several items expected to affect its first-half FY26 result.

The headline number is a $75 million reduction to reported net profit after tax (NPAT) linked to transaction costs from the sale of its RAMS mortgage portfolio.

That transaction remains on track to complete in the second half of 2026 and includes a consortium comprising Pepper Money Ltd (ASX: PPM), KKR, and PIMCO.

Beyond that one-off cost, the underlying business update looked relatively steady.

Management said lending and deposit growth for the half came in at 4% and 3%, respectively. Core net interest margin, excluding the timing effect of rate rises, was stable across 2026.

The bank also reported a 2% decline in expenses from productivity initiatives, while capital metrics improved, including a stronger CET1 ratio.

Geopolitical risks are starting to flow through

The more interesting part of the update may be what it says about the operating backdrop.

Westpac said recent geopolitical uncertainty and higher market volatility supported the treasury and markets’ net interest margin. Foreign currency translation from a weaker New Zealand dollar also flowed into the result.

It also lifted credit provisioning assumptions, with the ratio of collective provisions to credit risk-weighted assets increasing to 1.29%.

Foolish Takeaway

With the shares already near record highs, Tuesday’s small gain does look like investors are not overly concerned about the $75 million RAMS-related hit.

The bigger takeaway is that core banking momentum still looks healthy, with loan growth, deposit growth, stable margins, and lower costs helping offset a tougher macro backdrop.

From my perspective, despite the profit hit, Westpac still looks like a solid long-term investment. The shares remain close to all-time highs, and the underlying business continues to perform steadily.

The post Why Westpac shares are holding near record highs after a $75 million hit appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended KKR. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.