Westpac Banking Corporation’s recent half-year results have prompted a measured response from analysts, with forecasts for 2025 largely unchanged despite a mixed financial performance.
Shares fell 2.6% to AU$31.81 following the report, reflecting investor disappointment as revenue missed estimates by 2.2%, coming in at AU$11 billion. However, statutory earnings per share (EPS) of AU$0.96 surpassed expectations by 3.2%.
Analyst Forecasts for 2025
The latest consensus from 13 analysts projects Westpac’s revenue for 2025 at AU$22.0 billion, a 3.0% increase over the previous year. Statutory EPS is expected to dip by 3.2% to AU$1.97.
Notably, these forecasts are only marginally lower than pre-results estimates, indicating that analysts see no major change in Westpac’s underlying outlook.
The consensus price target remains steady at AU$28.57, with individual analyst targets ranging from AU$26.50 to AU$36.00, reflecting a moderate diversity of opinion but no dramatic split on the bank’s prospects.
Growth vs. Industry Peers
Westpac is forecast to accelerate its annualized revenue growth to 6.1% through 2025, well above its five-year historical average of 2.7% and outpacing the broader banking sector’s expected 4.4% annual growth.
Some forecasts are even more optimistic, projecting up to 16% annual revenue growth over the next three years, compared to 6.6% for the Australian banking industry as a whole.
This suggests analysts expect Westpac to regain momentum, particularly as economic growth in Australia is forecast to recover from 1.2% in 2024 to 1.9% in 2025.
Dividend and Profitability Concerns
Despite the positive revenue outlook, profitability remains under pressure. Net profit after tax for the half was AU$3.32 billion, down 1% year-on-year and below expectations. Net interest margin (NIM) contracted to 1.8%, reflecting intense competition in lending and deposit pricing, while operating expenses rose 3% due to continued investment in the UNITE transformation program and higher wage costs.
Several brokers have flagged that these factors could weigh on Westpac’s dividend sustainability through FY27, even as the interim dividend was held steady at 76 cents per share.
Valuation and Risks
Some analysts, such as Macquarie, rate Westpac as “underperform” with a 12-month price target of AU$27.50, citing execution risks around its transformation program and ongoing margin pressures.
The bank’s shares are seen as expensive relative to peers, trading at a forward P/E of 16 times and a fully franked dividend yield of 4.7%. While credit quality remains sound and capital ratios are robust, the outlook for earnings growth and dividend stability is seen as modest given the competitive and cost environment.