Westpac Surges Most Since August After Raising Capital, Ratesby
Westpac Banking Corp. surged the most in almost two months as it resumed trading after raising capital and mortgage rates, and posting full-year earnings that beat forecasts.
Shares of Australia’s second-largest lender by market value jumped as much as 5.2 percent in early trading Monday, the biggest intraday gain since Aug. 25. The stock, which had been untraded for three days, gained 4.1 percent to A$31.51 at 11:36 a.m. in Sydney. The benchmark S&P/ASX 200 Index was little changed.
Sydney-based Westpac boosted mortgage rates for the first time in five years for owner occupiers, citing the cost of holding more regulatory capital. The 0.2 percent increase, which also applies to real estate investors, will add about A$303 million ($219 million) in cash profit for the year ending September 2016, Credit Suisse Group AG analysts wrote last week. Westpac is also raising A$3.5 billion through a rights offering.
“While the capital raising removes any short-term uncertainty, one of the biggest positives was the interest-rate rise,” T.S. Lim, a Sydney-based analyst at Bell Potter Securities Ltd., said by phone. “The rate rise will add to margins and offsets earnings-per-share dilution from the share sale.”
Westpac said Friday it had raised A$1.6 billion from institutions. The offering to individual investors opens Oct. 23 and closes Nov. 11, it said. Unaudited full-year earnings rose 3 percent to A$7.82 billion, the company reported on Oct. 14 when it announced the rights offer.
Australia’s four largest lenders are adding almost A$20 billion of capital to meet regulations partly aimed at sheltering them from any downturn in the nation’s booming housing market.