In morning trade, the Westpac Banking Corp (ASX: WBC) share price is pushing higher despite the release of a mixed announcement.
At the time of writing, the banking giant’s shares are up almost 1% to $25.31.
This leaves the Westpac share price trading just short of its 52-week high of $25.52.
What did Westpac announce?
Investors have been buying the bank’s shares this morning despite revealing that its half year profits would be hit by notable items.
According to the release, there are a number of notable items that will impact its profit for the period by a total of $282 million after tax. The release explains that these items will impact both its cash earnings and statutory net profit equally.
Among its most notable items are additional provisions for customer refunds, payments, associated costs, and litigation provisions of $220 million.
There is also a $115 million write-down of capitalised software and other intangibles, $56 million for ending its relationship with IOOF Holdings Limited (ASX: IFL), an $84 million write-down of goodwill related to Lenders Mortgage Insurance, and an accounting loss on sale in Westpac Pacific along with transaction costs and payments associated with divestments totalling $113 million.
What else?
As you might have noticed, the notable items listed above add up to far more than $282 million.
That’s because these losses were partly offset by net gains in a couple of its tech investments.
The release explains that Westpac will recognise a net gain on the revaluation of its investment in Coinbase of $288 million and a gain on sale of its holding in Zip Co Ltd (ASX: Z1P) of $18 million.
Software capitalisation
In addition to the above, the bank has advised of changes in its software capitalisation policy.
Westpac has increased the threshold before a project is capitalised to $20 million (previously $1 million).
This policy has been applied from 1 October 2020 and will see the bank expense a higher portion of its investment spending from now on. However, the higher expense is not treated as a notable item and will have no impact to the carrying value of capitalised software at 30 September 2020.
Following today’s gain, the Westpac share price is now up 29% since the start of the year.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of February 15th 2021
More reading
- 2 ASX dividend shares with very generous yields
- Is the CBA (ASX:CBA) share price a buy for a recovery of dividends?
- Top brokers name 3 ASX dividend shares to buy today
- Top brokers name 3 ASX shares to buy today
- Westpac, ANZ, CBA share prices dip after class action for ‘junk’ insurance
James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. 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 Bruce Jackson.
The post Westpac (ASX:WBC) share price higher despite $282 million profit hit appeared first on The Motley Fool Australia.
from The Motley Fool Australia https://ift.tt/2S2fnwG
Leave a Reply