Category: Stock Market

ASX dividend shares that offer a high dividend yield can be really attractive for investors wanting passive income. We know that interest rates on savings accounts and term deposits fluctuate and may not always offer as much return.

Now could be the right time to look at ASX shares beaten down because of the current economic backdrop.

Real estate investment trusts (REITs) face a difficult situation in periods of higher interest rates as they put pressure on building valuations and also mean higher interest costs, hurting net rental profit.

Growthpoint Properties Australia Ltd (ASX: GOZ) has a portfolio of “high-quality” industrial and office properties across Australia. The company says it invests in existing properties to ensure they meet tenants’ needs now and into the future. Let’s take a closer look.

Large dividend yield expected

As of November 2023, Growthpoint had an occupancy rate of 94% and a weighted average lease expiry (WALE) of 5.8 years — “underpinning income to security holders”.

The Commsec forecast suggests it could pay a distribution per security of 20.5 cents in FY26. This would be a distribution yield of close to 9%.

I’ll also mention that the forecast for FY24 is 19.3 cents per security, a distribution yield of 8.2%.

How much are Growthpoint shares actually worth? It’s hard to truly value a property until it goes through a sale process.

The ASX dividend share advised in December 2023 that external valuations had been conducted for around 62% of the group’s portfolio. They indicated a decrease of approximately $137.8 million, or 4.7%, on a like-for-like basis compared to 30 June 2023’s book values.  

The specific decrease in external valuations of these properties is expected to reduce the net tangible assets (NTA) by 19 cents. But there are other factors that could impact the final NTA. They include internal valuations for the other properties, the value of derivatives, other Growthpoint investments and changes to net debt at the balance date.

At June 2023, the business had an NTA of $4, down 12.3% compared to June 2022.

With the Growthpoint share price at $2.35, it appears to be trading at a large discount.

What’s the outlook for these property sectors?

I don’t have a crystal ball, nor does management. However, the ASX dividend share does have a high occupancy rate and a compelling WALE.

Growthpoint managing director Timothy Collyer explains:

The group’s movement in preliminary draft external valuations reflects the increased cost of capital and higher return expectations from investors. In the industrial market, supply constraints continue to drive strong rental growth, which has largely offset yield expansion.

Office markets are experiencing higher-than-average vacancies, although physical occupancy continues to increase across all markets and is anticipated to improve in 2024 as more businesses implement return-to-office policies.

Despite the lower preliminary draft external valuation of the group’s properties, Growthpoint’s high-quality portfolio with secure tenants on long leases continues to perform well in terms of occupancy (94%) and WALE (5.8 years).

While the NTA may have more to fall, the Growthpoint share price could be undervalued, making the dividend yield too compelling to miss.

The post This ASX dividend share is forecast to pay a 9% yield in 2026 appeared first on The Motley Fool Australia.

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More reading

• $20,000 in savings? Here’s how I’d try to turn that into $1,463 a month of passive income
• How investing $100 per week can create $1,500 in annual ASX dividend income
• $10,000 in savings? Here’s how I’d try to turn that into $500 a month of passive income

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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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The Lendlease Group (ASX: LLC) share price is having a tough time on Monday.

In morning trade, the international property and infrastructure company’s shares are down 15% to $6.35.

This follows the release of the company’s half-year results.

Lendlease share price crashes on half-year results

• Revenue down 3.8% to $4,733 million
• Segment earnings before interest, tax, depreciation, and amortisation (EBITDA) down 20% to $283 million
• Operating profit after tax down 42% to $61 million
• Statutory loss after tax of $136 million
• Interim dividend of 6.5 cents per share

What happened during the half?

For the six months ended 31 December, Lendlease recorded a statutory loss after tax of $136 million.

Management notes that its statutory earnings were impacted by a reduction in investment property valuations, redundancy costs, and an additional provision in relation to UK building remediation regulations.

Funds under management (FUM) were down slightly during the half due to challenging markets. They reduced 1% to $47.8 billion.

There was $0.9 billion of new FUM deployed, down from $2.9 billion in the prior corresponding period. This was due to slower market conditions.

Positively, there is $6 billion of future secured FUM in delivery from Development projects that are planned to move into funds or mandates and $4 billion of third party capital mandates to be deployed.

Management commentary

Commenting on the half, Global CEO and managing director, Tony Lombardo, said:

Despite challenging capital markets, we’ve continued to execute on our stated strategic initiatives, simplifying the business and further streamlining our operations. We reached a major development milestone with completion of the $1.5b retail development, The Exchange TRX, and are nearing completion on $2b of luxury apartments at One Sydney Harbour, Barangaroo.

Outlook

Also potentially weighing on the Lendlease share price today was its outlook statement.

The company has revised its expected FY 2024 return on equity guidance to 7%, reflecting lower certainty of transaction timing and higher execution risks.

The Lendlease share price is X over the last 12 months.

The post Lendlease share price crashes on $136m half-year loss appeared first on The Motley Fool Australia.

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More reading

• Bendigo Bank share price tumbles on half-year earnings slump
• Why are Boral shares outperforming the ASX 200 today?
• A2 Milk share price jumps 12% on solid half-year results
• 1 ASX dividend stock down 50% to buy in February
• I’m planning to buy this top ASX ETF for my child

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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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The Bendigo and Adelaide Bank Ltd (ASX: BEN) share price is tumbling on Monday.

In response to the regional bank’s half-year results, its shares are down 4% to $9.46.

Bendigo Bank share price tumbles on half-year results

Here’s how the bank performed compared to the second half of FY 2023:

• Total lending down 0.7% to $78.2 billion
• Net interest margin (NIM) down 15 basis points to 1.83%
• Net interest income down 3.6% to $813.6 million
• Cash earnings after tax down 5% to $268.2 million
• Statutory net profit up 13.8% to $282.3 million
• Fully franked interim dividend up 3.4% to 30 cents per share

What happened during the half?

Bendigo and Adelaide Bank’s total lending was down 0.7% during the six months ended 31 December. This was driven by competitive market pressures, which weighed on residential lending volumes. Business lending was up 0.2% and Agribusiness was down 3.9% due to seasonal run-off in the Agribusiness book.

Also heading in the wrong direction was the bank’s NIM, which was down 15 basis points to 1.83%. It was impacted by price competition in both lending and deposits and a higher level of liquid assets.

This ultimately led to the bank’s cash earnings after tax falling 5% to $268.2 million. And while its statutory profit was up by a solid 13.8%, this reflects the benefits of Homesafe revaluations.

Management commentary

The company’s CEO, Marnie Baker, revealed that its consumer business was the main drag on its performance. She said:

Cash earnings for our Consumer division decreased 9.9% to $250.8 million due to intensity in competition on both sides of the balance sheet. The challenges outlined in our full year results remain. We have seen heightened competition across the mortgage portfolio and consequently slowing growth relative to system.

Baker also advised that she is optimistic the bank’s cost to income ratio will improve after a difficult half. The CEO adds:

Our cost to income ratio was challenged during the half, increasing by 230 basis points impacted by the lower income environment. We continue to work on our medium-term objective of a cost to income ratio towards 50%.

No guidance has been given for the second half.

The post Bendigo Bank share price tumbles on half-year earnings slump appeared first on The Motley Fool Australia.

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More reading

• Why are Boral shares outperforming the ASX 200 today?
• A2 Milk share price jumps 12% on solid half-year results
• 1 ASX dividend stock down 50% to buy in February
• I’m planning to buy this top ASX ETF for my child
• Morgans says these high-yield ASX dividend stocks are buys

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank. 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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Boral Ltd (ASX: BLD) shares are catching the eye on the ASX on Monday.

In morning trade, the building materials company’s shares are up 3.5% to $6.05.

This compares to the ASX 200 index, which is up 0.1%.

Why are Boral shares outperforming the ASX 200?

Investors have been buying the company’s shares this morning after it received a takeover offer from its largest shareholder, Seven Group Holdings Ltd (ASX: SVW).

According to the release, the investment company, which owns over 70% of Boral, has tabled a $6.05 per share offer to take full control. This comprises 0.1116 Seven Group shares and $1.50 cash per share.

This represents a modest 3.5% premium to where Boral shares ended the week on the ASX.

But the price may not stay there. The release notes that the offer price will increase to a maximum of $6.25 per share if it reaches the 90.6% compulsory acquisition threshold.

If that happens, it would mean a more palatable 6.8% premium to where Boral shares last traded.

But don’t expect a better offer any time soon. It advised that “it will not acquire Boral Shares for an amount in excess of $6.25 for at least 12 months following the close of the Offer.”

Seven Group’s CEO, Ryan Stokes, commented:

Today’s announcement represents an exciting opportunity to integrate Boral into SGH’s leading Industrial Services portfolio. The transaction has a compelling rationale for SGH, and for Boral’s shareholders, who would become SGH shareholders as part of the transaction and continue to benefit from the operational improvement journey underway at Boral. The terms of the Offer reflect our disciplined approach to capital allocation, and we will retain a strong balance sheet position post-transaction.

Boral says take no action

As things stand, Boral is advising its shareholders to take no action.

Shareholders are advised to take no action in relation to the Offer, or any correspondence received from SGH, until they receive further information from Boral in relation to the Offer.

A board committee of Boral’s independent directors has been established and is currently considering the offer.

The post Why are Boral shares outperforming the ASX 200 today? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
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• Here are the top 10 ASX 200 shares today
• Why Boral, Dicker Data, Droneshield, and Novonix shares are charging higher
• Boral share price jumps 13% on massive profit growth and guidance upgrade

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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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The A2 Milk Company Ltd (ASX: A2M) share price is starting the week with a bang.

In morning trade, the infant formula company’s shares are up 12% to $5.67.

This follows the release of its half-year results today.

A2 Milk share price jumps on half-year results

• Revenue up 3.7% to NZ$812.1 million
• Earnings before interest, tax, depreciation, and amortisation (EBITDA) up 5% to NZ$113.2 million
• Net profit after tax up 15.6% to NZ$85.3 million
• Cash balance increased 12% to NZ$792.1 million

What happened during the half?

For the six months ended 31 December, A2 Milk reported a 3.7% lift in revenue to NZ$812.1 million.

Management advised that this was driven by continued growth in the China & Other Asia segment (up 16.5%), partially offset by a 24.1% decrease in the ANZ segment due largely to a change in distribution strategy. Elsewhere, USA revenue increased by 8.6% and MVM decreased by 4.7%.

Infant milk formula (IMF) sales grew 1.5% with China label up 10.4% and English label down 6.9%. Liquid milk sales also grew modestly, with ANZ sales up 1.5% and USA sales up 7.0%. Other nutritional sales grew by 48.5% and ingredients sales (MVM) decreased by 4.7%.

A2 Milk’s gross margin came in at 46.7%, which was 0.2ppts higher than FY 2023 but 0.9ppts lower than the prior corresponding period. This was primarily due to higher input costs, foreign exchange movements, and the adverse impact of sales mix, which offset price increases and cost savings.

Nevertheless, the company’s EBITDA increased by 5% to NZ$113.2 million. This reflects increased revenue, lower administrative and other expenses, and higher net interest income.

But despite the company reporting a 12% increase in its cash balance to NZ$792.1 million, it will not be paying a dividend. Management advised that it has decided to continue to prioritise investment in growth opportunities and balance sheet strength, ahead of returning capital to shareholders.

Outlook

Management warned that China IMF market conditions remain challenging with a double-digit decline in market value still expected in FY 2024.

Nevertheless, A2 Milk’s revenue growth guidance for FY 2024 has improved since its prior outlook statement. It expects revenue growth of low to mid single-digit percent for the year. It also expects its margins to be largely in line with what was recorded in FY 2023.

The A2 Milk share price is still down 12% over the last 12 months despite today’s gain.

The post A2 Milk share price jumps 12% on solid half-year results appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. 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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The month of February is useful for finding ASX dividend stocks that have sold off heavily. It’s reporting season and provides a great opportunity for investors to have an in-depth look at what’s really going on for some companies.

ASX retail share Universal Store Holdings Ltd (ASX: UNI) is down heavily from its peak. It has a few different brands, including Universal Store, Perfect Stranger, THRILLS and Worship. These are youth fashion apparel brands that sell ‘on-trend’ products aimed at 16 to 35-year-olds.

The Universal Store share price is 50% lower than it was in November 2021 – half the price that it was before.

Declines lead to bigger yields

If a share price falls, not only does the ASX dividend stock become cheaper, but it also boosts the prospective dividend yield. For example, if a company has a dividend yield of 5% and its share price drops 10%, that pushes the yield up to 5.5%. If it falls by 25%, then the 5% yield becomes 6.25%.

Universal Store has grown its dividend each year since it started paying dividends in 2021. In FY23, it paid an annual fully franked dividend per share of 22 cents, so this translates into a trailing grossed-up dividend yield of 7.6%.

The estimate on Commsec currently suggests the retailer could pay an annual dividend per share of 23.1 cents, translating into a grossed-up dividend yield of 8%. Bear in mind a forecast is just an estimate – the dividend could be smaller or bigger than that.

In FY25, the business might pay an annual dividend per share of 25.9 cents — a grossed-up dividend yield of 8.9%. By FY26, it could pay an annual dividend per share of 28.2 cents. This would be a grossed-up dividend yield of 9.7%.

Can the ASX dividend stock pay this passive income?

Universal Store has shown a willingness to pay healthy dividends to shareholders and grow the dividend.

I think the ASX dividend stock has a very good chance of growing earnings in FY25 and FY26, assuming the economy stays as strong as it is.

In November, the company advised told investors in an update that total sales were up 14.7% to $88.4 million, with its underlying gross profit margin being in line with last year at 59% and the cost of doing business being slightly lower than last year. Underlying earnings before interest and tax (EBIT) was up by roughly $2 million.

The company continues to grow its store network, which grows its scale. In the first half of FY24, it was expected to open seven new stores – two Universal Store locations, four Perfect Stranger stores and one new-format THRILLS store.

It indicated it was planning to open another four to seven stores in the six months to June 2024, which would leave it with between 104 to 107 stores.

The ASX dividend stock is trading at just 9x FY26’s estimated earnings, according to Commsec. If we take a longer-term mentality and hold during any short-term volatility, I think it’s materially undervalued at this price. The growing dividend could also be very rewarding.

The post 1 ASX dividend stock down 50% to buy in February appeared first on The Motley Fool Australia.

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More reading

• Buy Rio Tinto and this ASX dividend stock
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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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I want to be able to teach my child about investing in ASX shares to help them financially in the future, and to share the power of compounding. I plan to use the ASX ETF BetaShares Global Sustainability Leaders ETF (ASX: ETHI) to help me do that.

My child won’t turn 20 for many years yet, leaving plenty of time for the money to grow.

Compounding is a very powerful tool – it can turn $1,000 into $2,600 after 10 years if it grows by 10% per annum. The figure becomes $6,700 if it grows by 10% annually for 20 years.

Why I like the ETHI ETF

For starters, it offers the type of strong diversification that I’d want from an ASX exchange-traded fund (ETF).

Being able to buy a basket of 300 shares from across the world is appealing. I don’t want to make an Australian-focused investment and miss out on the rest of the global share market and global economy.

The fund invests in some of the world’s leading businesses such as Nvidia, Visa, Mastercard, Apple, Home Depot, Toyota, ASML and Salesforce.

But I’m not interested in it just because it offers diversification and has strong holdings, though that helps a lot.

It also has an ethical overlay that ensures it’s only invested in climate leaders. The ASX ETF excludes various sectors such as tobacco, weapons, alcohol, gambling and so on. It avoids businesses that lack gender diversity on the board and does not invest in businesses where there are supply chain concerns (such as child labour).

I think owning a portfolio of large, environmentally sustainable and ethical companies can perform well.

Whether it’s coincidence or influential that these ethical businesses have performed well, the ETHI ETF has delivered an average return per annum of 17.6% since it started in January 2017.

I think it’s the type of investment that could help grow in value for my child over the longer term, it can do well for the planet, and we can feel good owning it. The annual management fee is just 0.59%, which I think is reasonable for how much work has gone into constructing the portfolio.

The post I’m planning to buy this top ASX ETF for my child appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison 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 ASML, Apple, Home Depot, Mastercard, Nvidia, Salesforce, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2025 $370 calls on Mastercard and short January 2025 $380 calls on Mastercard. The Motley Fool Australia has recommended ASML, Apple, Mastercard, Nvidia, and Salesforce. 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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There are a lot of options for income investors on the Australian share market.

Two high-yield ASX dividend stocks that analysts at Morgans think investors should be buying are listed below.

Here’s what the broker is saying about them:

Baby Bunting Group Ltd (ASX: BBN)

Morgans thinks that this baby products retailer could be an ASX dividend stock to buy.

The broker currently has an add rating and $2.00 price target on its shares.

Although it has been disappointed with the company’s recent performance, Morgans believes that management’s strategy will turn things around and drive growth.

In the meantime, the broker is still forecasting some attractive dividend yields. It expects fully franked dividends per share of 9.5 cents in FY 2024 and then 12.4 cents in FY 2025. Based on the current Baby Bunting share price of $1.80, this will mean yields of 5.3% and 6.9%, respectively.

Morgans has an add rating and $2.00 price target on the company’s shares.

HomeCo Daily Needs REIT (ASX: HDN)

Morgans also believes that HomeCo Daily Needs could be an ASX dividend stock to buy.

It is a property company with a focus on neighbourhood retail, large format retail, and health and services. HomeCo Daily Needs has a high quality tenant base with over 80% either ASX-listed and/or national retailers.

The broker currently has an add rating and $1.37 price target on its shares.

And much like Baby Bunting, Morgans expects some above-average yields from the company in the near term. It is forecasting dividends per share of 8.3 cents in FY 2024 and then 8.5 cents in FY 2025. Based on the current HomeCo Daily Needs share price of $1.27, this will mean yields of 6.5% and 6.7%, respectively.

The post Morgans says these high-yield ASX dividend stocks are buys appeared first on The Motley Fool Australia.

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More reading

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended HomeCo Daily Needs REIT. 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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At the start of each week, I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Pilbara Minerals Ltd (ASX: PLS) continues its long run as the most shorted ASX share despite its short interest easing to 19.2%. Short sellers appear to believe that lithium prices are going to stay lower for longer.
• Syrah Resources Ltd (ASX: SYR) has short interest of 16.9%, which is down week on week. This graphite producer has been struggling with weak battery materials prices. Short sellers don’t seem to believe this will improve any time soon.
• Core Lithium Ltd (ASX: CXO) has short interest of 13%, which is up slightly week on week. This lithium miner recently announced plans to restrict production to reduce costs.
• Sayona Mining Ltd (ASX: SYA) has 11.4% of its shares held short, which is down slightly since last week. This lithium miner is currently paying more to mine its lithium than it receives from sales.
• Deep Yellow Limited (ASX: DYL) has seen its short interest rise to 10%. There are doubts about the bullish outlook of uranium prices following a recent update from a large miner.
• IDP Education Ltd (ASX: IEL) has 9.9% of its shares held short, which is flat week on week. This is likely to be down to unfavourable regulatory changes and the loss of its testing monopoly in Canada.
• Genesis Minerals Ltd (ASX: GMD) has seen its short interest ease to 9.1%. This may be due to concerns over integration risks from its recent acquisition spree.
• Weebit Nano Ltd (ASX: WBT) has short interest of 8.6%, which is down since last week. Short sellers don’t appear confident this semiconductor company will ever live up to its market capitalisation of almost $750 million.
• Chalice Mining Ltd (ASX: CHN) has short interest of 8.4%, which is down week on week. This mineral exploration company’s shares have crashed deep into the red over the last 12 months following news that its production is still years away.
• Flight Centre Travel Group Ltd (ASX: FLT) has 8.1% of its shares held short, which is down since last week. There are concerns over this travel agent’s growth and revenue margin assumptions.

The post These are the 10 most shorted ASX shares appeared first on The Motley Fool Australia.

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More reading

• 3 things ASX investors should watch this week
• Here are the top 10 ASX 200 shares today
• If I invest $10,000 in Flight Centre shares, how much dividend income will I receive in 2024?
• ASX mining shares up amid Labor plan to spend multibillions on renewables revolution
• Why Fletcher Building, GQG, Pilbara Minerals, and Tyro shares are climbing today

Motley Fool contributor James Mickleboro 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 Idp Education. The Motley Fool Australia has recommended Flight Centre Travel Group and Idp Education. 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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The Westpac Banking Corp (ASX: WBC) share price is one to watch today following the release of the bank’s first-quarter update for the three months ending 31 December.

The S&P/ASX 200 Index (ASX: XJO) bank stock closed on Friday trading for $24.57 a share.

Here’s what the big four bank just reported.

Westpac share price on watch as net interest margins shrink

• Unaudited net profit of $1.5 billion, down 6% from the 2H 2023 average
• Unaudited net profit excluding notable items of $1.8 billion, in line with 2H 2023
• Core net interest margin (NIM) of 1.80%, down 0.04% from 2H 2023
• Common Equity Tier 1 (CET1) capital ratio of 12.3%, down 0.09% from September 2023

What else happened with Westpac during the quarter?

The 6% drop in net profit for the quarter may not have a material impact on the Westpac share price today, with the bank noting the decline was due to notable items that exclusively related to hedge accounting which, management noted “will reverse over time”.

Westpac’s pre-provision increased by 1% over the three months. Revenue and expenses were both up by 2% over the period. The increased expenses were fuelled by higher amortisation expenses and ongoing inflationary pressures.

The 0.04% drop in NIM was predominantly driven by ongoing mortgage competition among the Aussie banks. While the bank said the 0.09% fall in the CET1 ratio reflected the second half dividend payment “more than offsetting earnings for the quarter”.

Credit impairment provisions of $5.1 billion as at 31 December came in $1.5 billion above the expected losses of Westpac’s base case scenario.

The big four bank has completed 31% of the $1.5 billion on market share buyback it announced in November.

What did management say?

Commenting on the results that could move the Westpac share price today, CEO Peter King said:

I’m pleased with our efforts to strengthen the Westpac franchise. Our Consumer NPS [net promoter score] has increased reflecting improved mortgage servicing capability and Westpac Institutional Bank’s rankings across key industry surveys are higher.

From a credit quality perspective, we saw a reduction in business stress while a rise in 90+ day mortgage delinquencies reflects the tougher economic environment.

What’s next?

Looking to what could impact the Westpac share price in the months ahead, King added:

We expect the economy to remain resilient, supported by low unemployment and healthy corporate sector balance sheets. The economic slowdown, combined with abating inflationary pressures, should provide scope for monetary policy to become less restrictive within the next year.

We continue to prioritise financial strength with capital, funding and liquidity well above regulatory minimums. Risk management remains a priority.

Following the completion of 100% of CORE [customer outcomes and risk excellence] program activities, we have commenced the transition period which will continue throughout 2024.

Westpac share price snapshot

The Westpac share price is up 7% in 12 months.

Shares the ASX 200 bank stock have gained 20% since the recent October lows.

The post Westpac share price on watch following $1.8 billion quarterly profit appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Which ASX 200 large-cap shares offer the best dividend yields in 2024?
• Forget Westpac and buy these top ASX dividend stocks
• Big news: 15 ASX 200 shares smashing 52-week highs this Tuesday
• Westpac shares at a 52-week high ahead of results: What’s the market expecting?

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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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