WBK - Westpac Banking: Impairment Benefit And NIM Improvement Were Positive Surprises

• Westpac's 1Q FY 2021 adjusted cash earnings was 54% higher than the average of its quarterly adjusted cash earnings for 2H FY 2020, thanks to a A$501 million impairment benefit.
• Another positive surprise for Westpac in the recent quarter was an improvement in its net interest margin, but this does not seem to be sustainable.
• Westpac's strong capital position should support dividend growth, with market consensus expecting its dividends per share to grow from A$0.31 in FY 2020 to A$1.05 in FY 2021.
• The market values Westpac at 1.36 times trailing P/B and 15.2 times consensus forward FY 2021 P/E.

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