Whie the announced write-downs largely reflect the accountants’ valuation catching-up, Citi believes it is a setback for management. It’s thought they had been looking to build credibility over an ambitious cost-out strategy.
Westpac Bank will incur -$1.3bn (post tax) in notable items at the FY21 results, largely due to -$965m in asset write-downs in Westpac institutional Bank (WIB).
The broker downgrades FY21 cash earnings by around -20%, having taken previously announced separation costs below the line. The Buy rating and $30 target price are unchanged.
Target price is $30.00.Current Price is $25.63. Difference: $4.37 – (brackets indicate current price is over target). If WBC meets the Citi target it will return approximately 15% (excluding dividends, fees and charges – negative figures indicate an expected loss).