The Westpac Banking Corp (ASX: WBC) share price is higher today and could rise over time as the bank sticks around in Asia.
A lot of the company’s earnings are generated from Australian mortgages. However, Australia isn’t the only place it makes money. New Zealand is one obvious place, but it also makes money from some Asian operations.
Westpac Banking Corp (ASX: WBC) share price
Westpac to stay in Asia
The ASX bank share announced that it had concluded the sale process for its Pacific banking businesses and will retain Westpac Fiji and Westpac Bank PNG Limited.
The company said it will continue to support local business, improve digital and service capabilities for customers and deliver important community programs in financial literacy and education.
But there’s more to the story, according to reporting by the Australian Financial Review.
The Australian Federal Government reportedly has indicated that it wants to see Australian companies play a role in the region.
Westpac has been considering potential buyers such as French bank BRED-Banque Populaire and PNG institutions NasFund and Credit Corp, according to the news outlet. These institutions had supposedly made bids for Westpac’s Asian subsidiaries. Fiji National Provident Fund has also been interested.
The AFR‘s sources in Westpac said that the Australian government had sent messages that it would be “desirable” for Westpac to maintain operations in the Pacific at a time that China’s interests and influence in the region is expanding.
The newspaper quoted Pacific Minister Pat Conroy who said:
“The Australian government is really happy about the decision and it demonstrates the Australian corporate sector’s commitment to the Pacific”.
Westpac Institutional Bank boss Anthony Miller told staff in an email, seen by the AFR, this week:
Westpac has a great role to play in this very important region with our ability to be a strong, stable and trusted financial partner in the Pacific.
Our plans are to invest to grow Pacific banking by supporting local businesses, improving digital and service capabilities for customers, working to further strengthen our risk environment and delivering leading community programs, including on financial literacy and education.
Final thoughts on Westpac shares
While it’s not hugely important if Westpac owns these businesses or not, I think it’s a good thing that the business has earnings diversification and more avenues for growth. It’s also a good thing that Westpac can play its part for Australia in the region. However, due to the possible increase in arrears due to higher interest rates for borrowers, I wouldn’t call Westpac shares a great buying opportunity today.
