Is WBC’s 7% Share Price Increase This Year Indicative Of A Profitable Endeavour?

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Since Covid, the Westpac Banking Corp share price has become a reliable investment for many on the ASX, but does a 7% increase in share price means something?

As Australia’s second-largest Big Four bank, Westpac is the nation’s financial system leader. Based out of Sydney, this bank specialises in helping homeowners, investors and individuals through credit cards and personal loans. Additionally, companies receive assistance from its offerings for businesses.

Aussie investors can gain insights into corporations such as Westpac Banking Corp and Bank of Queensland Limited by visiting a human resources website like Seek. You’ll find data on company culture on this site, including employee reviews. To illustrate the quality of WBC’s workplace environment, their overall rating is 3.9/5 – higher than the ASX banking sector average score of 3.71.

Investing in a bank like WBC or National Australia Bank Ltd requires knowledge of their profits. Thankfully, the NIM is one of the easiest ways to determine this information quickly. 

The calculations found that the average net interest margin across all ASX significant banks was 1.92%. In comparison, Westpac Banking Corp’s lending rate fell below 1.9%, possibly due to various factors worth exploring further for potential investors and analysts alike.

In 2022, we’ve delivered a solid financial result and made steady progress on our strategic priorities. We’ve built positive momentum and positioned the company for the future. I’m pleased with our overall performance. We sharpened our focus on core banking, reduced costs, and improved customer service.” Westpac CEO Peter King said. 

“Westpac returned to growth in our key Australian mortgages and business lending segments. In the second half, our banking divisions delivered strong growth in core earnings on the back of good cost and margin management. Our balance sheet is in good shape across capital, liquidity and asset quality, and we’ve determined a final, fully franked ordinary dividend of 64 cents per share.” Peter King added.

Applying the DDM model, it is found that WBC shares are worth $21.24 if their dividend payment is considered as-is. An expected dividend of $1.40 per share provides a higher valuation of $23.79 – which aligns with WBC’s current market price of $23.26.

Going one step further and incorporating franking credits into the calculation gives us an even more significant number: A whopping total value soaring to a sky-high figure at approximately $33.99.

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