At time of writing, the share price of Westpac Banking Corporation [ASX:WBC] is down 1.46%, trading at $27.04.
The Westpac share price had recovered to mid-November levels over the past two weeks, but has been on a losing streak in the last three sessions:
The latest news out of the company is its half-year results release, as well as the details of its upcoming dividend.
Westpac share price reacts to dent in profits, but dividend remains the same
At the commencement of trading today, the Westpac share price dropped as low as $26.81, then found support around $26.90.
Here are the key data points for their half-yearly results:
- Statutory net profit of $3.17 billion, down 24%
- Cash earnings $3.296 billion, down 22%
- Return on equity down 3.5% to 10.4%
- Unchanged interim dividend of 94 cents per share
The company has had to abandon providing personal financial advice and has flagged that its compensation bill could rise further.
National Australia Bank Ltd [ASX:NAB] recently cut its dividend by 16% and Australia and New Zealand Banking Group Limited [ASX:ANZ] kept their dividend unchanged, so Westpac investors are likely pleased that their dividend was also untouched.
Westpac CEO Brian Hartzer commented on the half year report saying, ‘this is a disappointing result reflecting weaker business conditions and the bank dealing decisively with outstanding issues, including remediation and resetting our wealth strategy.’
Outlook for the Westpac share price
The company noted the following:
‘House prices are likely to remain soft and home building is set to reduce through 2019 and into 2020. We expect system housing credit growth to slow to 3% in the current bank year and fall further next year to 2.5%. That would imply total credit growth slowing to 3% this year and 2.8% next year. We are dealing decisively with a difficult commercial environment for banks, delivering productivity savings while we continue to simplify our products, digitise our business, and modernise our platforms.’
This cautious tone may be justified, but the outlook for blue chip stocks is not all bad.
In a recent article I examined the connection between rising rents and the recent trend for shares of Amazon.com Inc [NASDAQ:AMZN].
It’s not just the US, but Australia too.
Many commentators will have you believe that the immediate future is bleak.
But you need only look at how REITs are performing to see that there is still vitality in the economy as it stands today.
As a result, if your investment horizon is in the six month range, there could be modest gains to be had on shares of Westpac Banking Corporation [ASX:WBC].
For Money Morning