Westpac 2H16 earnings result was in-line with market expectations and the dividend was maintained. 2H16 cash profit came in at $3.9b and DPS $0.94 with a payout ratio of 80%. ROE has fallen from 15% to a target of 13 – 14%.
Revenue growth was slightly negative which has been the case across most of the recent banking results.
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FY17 outlook is for revenue to remain flat and underlying profit to be 3% higher at $12.6b, on EPS of $2.38 and DPS of $1.88 placing the stock on a forward yield of 6.3%.
We’re running covered calls over the bank holdings to enhance returns in what we see as a low growth environment.
