Skip to content

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved.

Westpac share price: 2020 results and dividend examined

We examine the highlights from Westpac Banking Corporation’s just-released FY20 financial results.

Westpac share price: 2020 results and dividend examined Source: Bloomberg

Westpac share price edges lower on FY20 results

Westpac Banking Corporation (ASX: WBC) saw its share price dip after the retail-focused Australian bank reported its FY20 financial results to the market.

It’s been a roller coaster year for Australia’s banking complex, as ultra-low interest rates put extreme pressure on bank net interest margins (NIMs), regulators hone in on bank dividend policies, and the coronavirus pandemic tests the strength of the Big Fours’ balance sheets.

Indeed, Westpac was unable to evade these headwinds in 2020, reporting significantly lower profits, earnings and dividends as part of today's full-year annual report.

The bank’s Chief Executive, Peter King described the year as particularly challenging and said the bank’s financial result was a disappointing one.

Though 2020 proved to be a challenging year, Mr king also noted that progress has been made on making Westpac into a 'simpler, stronger bank', flagging a number of important changes that have been actioned in recent times, including: 'introducing a new operating model, progressing the exit of several businesses [and] adding more than 400 people to our risk, compliance and financial crime team.'

Despite such progress, the stock was bid lower during Monday’s session – down around 1.4% to $17.66 per share a little after noon. By 2:27PM the stock had pulled back somewhat, trading up to $17.91 per share.

For reference, a year ago WBC traded north of $27 per share.

The 2020 results in focus

As alluded above, Westpac reported steep earnings declines across the board in 2020 – revealing statutory net profits of $2,290m (-66%), cash earnings of $2,608m (-62%) and earnings per share (EPS) of 72.5c (-63%).

Much of this weakness can be pinned on the $1.3bn fine AUSTRAC handed down to Westpac as a result of breaches to the AML/CTF Act. Specifically, when excluding notable items, the bank's cash earnings were down a more mild 34%, to $5,227m; while its return on equity (ROE) came in at 7.69%. For reference, inclusive of notable items, WBC’s FY20 ROE came in at 3.83%.

Elsewhere, the bank reported a Common Equity Tier 1 (CET1) ratio of 11.13% – reflecting the continued strength of WBC’s balance sheet.

Finally and looking at how the pandemic has impacted the bank's loan book, Westpac reported that approximately 41,000 of its mortgage accounts are currently in deferral – equal to $16.6bn worth of loans. By comparison to Westpac’s housing loan book, the bank reported that just $1.0bn worth of small business loans were currently in deferral, across 4,300 customers.

The dividend

Today’s dividend announcement is likely to disappoint income-focused investors, with Westpac declaring a final dividend of 31 cps. In FY19 WBC paid a final dividend of 80 cps.

It should be noted however that this dividend is in-line with APRA’s recently updated capital management guidance – with the 31 cps dividend representing a 49% payout of FY20 profits.

The FY20 final dividend is set to be paid on 18 December.

Want to take a position in Westpac – long or short?

Create an IG trading account or log in to your existing account to get started now.

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get commission from just 0.08% on major global shares
  • Trade CFDs straight into order books with direct market access
Learn more

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

You might be interested in…

<h3>How much does trading cost?</h3>
<h3>Find out about IG</h3>
<h3>Plan your trading</h3>

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.