WBC +2.79%: Delivered a result broadly in line with market expectations, though the market’s initial scepticism saw the stock down as much as 1.6% before paring losses.
- FY Revenue rose by 3.7% to $22.38bn, above analyst consensus of $22.26bn.
- FY Underlying profit came in at $6.92bn, inline with consensus of $6.92bn.
- Net Interest Margin fell 1.94% from 1.95% YoY.
- Mortgage lending grew +5% YoY and Business lending +15% YoY
- Final dividend of 77c fully franked
Two key areas caught our eye – loan growth was solid while they also lifted guided investment spend for FY26 to $2 billion – including an outsized contribution from the UNITE transformation program, which is largely expensed through the P&L.
WBC is undergoing a significant upgrade under new CEO Anthony Miller to bring together three separate banking platforms, and this is weighing on earnings. While revenue grew 3%, expenses surged 9% to just under $12 billion, with $400 million going into the early stages of the Unite project, and another $400 million into higher salaries, increased superannuation payments and more investment in extra bankers.
They talked heavily about this investment having a positive impact on their overall service offering, which is starting to show up in feedback scores, though it’s only early days. Most of the financial benefits will show up in the outer years, which is FY28/early FY29 at this stage. However, it must be emphasized that tech upgrades of this size are complex and tend to cost more and take longer, though the market is buying into the strategy for now.
- A solid update with good growth in deposits (+10%), while business and institutional lending shot up 15% and 17% respectively.
MM remains long and bullish WBC
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