Westpac shares at a 52-week high ahead of results: What’s the market expecting?

Westpac Banking Corp (ASX: WBC) shares will be in focus next week.

That’s because the banking giant is scheduled to release its first quarter update on Monday 19 February.

Ahead of the release, let’s take a look to see what the market may be expecting from Australia’s oldest bank.

Westpac Q1 update preview

While brokers haven’t laid out the first quarter expectations for Westpac, we know what they are looking for in FY 2024.

As a result, we can use next week’s update to see if the bank is performing in-line, ahead, or below expectations.

But firstly, let’s have a quick reminder of Westpac’s outlook commentary for the first half. Goldman Sachs said:

On the outlook into 1H24, WBC noted: i) Persistent inflation, ii) Software amortisation headwind, iii) Risk & reg spend to remain elevated, iv) Focus on cost reset, and v) Sustained investment of A$2 bn pa over the next four years.

It also warned that its net interest margin (NIM) could be under pressure again. Goldman adds:

Management highlighted that competition on mortgages will translate to continued NIM deterioration.

What to look out for?

Three things for investors to look out for with the update are its costs, profits, and NIM.

In respect to costs, Goldman Sachs expects Westpac’s costs growth to accelerate in FY 2024. It is expecting expenses to be up 9% for the full year due largely to staff costs, operating expenses, and software amortisation.

This is expected to lead to its cash profit falling 8.3% to $6,618 million for the year.

Finally, as for its NIM, Goldman expects it to fall from 195 basis points to 187 basis points over the year.

So, if the bank is run-rating better than these metrics and showing signs of outperforming expectations over the course of the year, this could give Westpac’s shares a big boost.

Stay tuned for that update.

The post Westpac shares at a 52-week high ahead of results: What’s the market expecting? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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.

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