Citi expects the big story in Westpac Banking’s FY21 results will be the reported weak exit net interest margin of 1.91-1.93%, a material miss on an expected 1.98-2.00%. The broker notes this is likely an inversion of replicating portfolio momentum but awaits further detail.
Full year cash earnings of $5,352m missed Citi’s forecasts by 1-2%, driven by a 6-7% miss on core earnings. Costs of $10.9bn were higher than expected, and while cost guidance for FY22 was not provided the company reiterated an $8bn cost base target for FY24.
The Buy rating and target price of $30.00 are retained.
Sector: Banks.
Target price is $30.00.Current Price is $23.78. Difference: $6.22 – (brackets indicate current price is over target). If WBC meets the Citi target it will return approximately 21% (excluding dividends, fees and charges – negative figures indicate an expected loss).
