Westpac (ASX:WBC) Valuation in Focus After Share Buyback Extension and Dividend Increase

Westpac Banking (ASX:WBC) has extended its share buyback program by a year and announced a higher ordinary dividend for the recent half, with key ex-dividend and payment dates approaching. These updates highlight management's ongoing focus on shareholder returns.

See our latest analysis for Westpac Banking.

Westpac Banking’s active share buyback and stronger dividend appear to be fueling renewed confidence in the stock. The 2025 year-to-date share price return stands at an impressive 21.69%. Investors are taking note, as the total shareholder return has soared 26.99% over the past year and more than doubled over three years. This suggests momentum is firmly on Westpac’s side even as the latest updates arrive.

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With shares trading near multi-year highs and analyst targets suggesting a potential pullback, the question now is whether Westpac is undervalued or if the market has already priced in its future growth prospects.

Most Popular Narrative: 16.5% Overvalued

Westpac's latest close sits well above the narrative's calculated fair value, with analysts projecting more limited upside from these levels. Shifting profit margins and top-line pressures are reflected in this analysis.

The UNITE program, intended to simplify systems and improve processes, requires significant investment without immediate returns. This may affect earnings in the short to medium term. The transition from call to term deposits, in response to rising interest rates, has changed the deposit mix. This might be less favorable for net interest margins and could influence revenue outcomes negatively.

Read the complete narrative.

Just how much do operating costs and deposit trends sway the bank’s outlook? The core of this narrative is a future earnings path shaped by ambitious investments and a profit margin rethink. Are you intrigued by the calculations driving this fair value? Explore the unique blend of revenue and margin assumptions behind this target by reviewing the full narrative.

Result: Fair Value of $33.86 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, strong financial performance and effective margin management could counter competitive concerns and help Westpac outperform even cautious expectations in the coming years.

Find out about the key risks to this Westpac Banking narrative.

Build Your Own Westpac Banking Narrative

If you see Westpac differently or want hands-on insight, you can explore the numbers and assemble your own story in just a few minutes. Start now: Do it your way

A great starting point for your Westpac Banking research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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