Westpac Banking Corp has announced third quarter unaudited cash earnings of $1.32bn and the board has decided to not declare a dividend for 2020, however, Morgans forecasts a final dividend of 48 cents.
The third-quarter net interest margin (NIM) of 2.05% is softer than the broker had expected. The analyst notes the key drags on the margin in the quarter were a strong build-up of liquid asset balances, lower cash rate and higher term deposits.
Credit loss provisioning looks relatively conservative, suggests the broker.
Morgans emphasises there are downside risks to the broker’s earnings and dividend forecasts as a result of ongoing pandemic effects.
The Add rating is maintained. The target price is unchanged at $22.50.
Sector: Banks.
Target price is $22.50.Current Price is $17.09. Difference: $5.41 – (brackets indicate current price is over target). If WBC meets the Morgans target it will return approximately 24% (excluding dividends, fees and charges – negative figures indicate an expected loss).
