Westpac reported a 138 per cent surge in statutory net profit to $5.458bn, but its shares slumped 7.36 per cent to $23.78
The Australian share market rose on the first trading day of the month, with travel stocks boosted by news of a Singapore travel bubble, but top-four bank Westpac was a major drag after its full-year results failed to impress.
The benchmark S&P/ASX200 index ended 0.64 per cent higher at 7370.8, while the All Ordinaries Index advanced 0.7 per cent to 7692.2.
The recovery after Friday’s sell-off, which was the worst day in four weeks, followed a positive lead from Wall Street.
If past performance is anything to go by, we’d be seeing bull sentiment build up into the new year – and yes, past performance is not indicative of future results, but who wants to hear that? OMG chief executive Ivan Tchourilov said.
Whether the excellent start (to November) continues will depend on what comes out of the RBA board meeting tomorrow morning, he said.
Key financial institutions are betting on the RBA rolling back its yield curve control policy (buying specific bonds to force the yield into target range) and expecting rate hikes to be brought forward from the 2024 date provided previously, he said.
CommSec analyst Steven Daghlian said the bond market had been moving quite aggressively in recent sessions.
In fact on Friday, the 10-year bond yield rose above 2 per cent for the first time since the pandemic started. This is important because it’s seen as a bit of a benchmark for interest rates on loans across the economy, both for home and also business loans, he said.
The market has been recently very much focused on higher inflation, which has been on the way up around the world. It’s been the case in Australia with both business and also consumer inflation rebounding more than was anticipated by many economists.
Any comments by the RBA on updated forecasts and policy on Tuesday would be in laser-focus, he noted.
Westpac reported a 138 per cent surge in statutory net profit to $5.458bn, but its shares slumped 7.36 per cent to $23.78.
An announced $3.5bn share buyback plan wasn’t enough to combat the sell-off, Mr Tchourilov said.
Westpac more than doubled cash earnings for the year to September, which unfortunately fell short of guidance. Expenses surged and their net interest margin was shaved down during the second half of the financial year, meaning income for the period was way below expectations, he said.
He said: The buyback comes as a partial sweetener that will consolidate positions for those still holding the shares.