Is Westpac (ASX:WBC) Using Covered Bonds To Quietly Reshape Its Funding And Profitability Profile?

• Westpac Banking Corporation recently completed several euro-denominated fixed-income offerings, including a €1.00 billion 3.119% covered bond due January 2, 2031, and two €50.00 million secured issues maturing in 2045 and 2047, alongside resetting the 4.0441% coupon on its GBP 500.00 million floating-rate notes due April 2026.
• These transactions expand Westpac’s secured wholesale funding base and extend its debt maturity profile, which can influence its capital flexibility and interest expense management.
• We’ll now examine how Westpac’s latest €1.00 billion covered bond issuance may influence its investment narrative around funding and profitability.

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Westpac Banking Investment Narrative Recap

To own Westpac, you generally need to be comfortable with a large, slower growing bank that relies on disciplined margin management, balance sheet strength and reliable wholesale funding. The latest €1.10 billion in covered bond issuance modestly supports that story by broadening secured funding, but it does not materially shift the near term focus on earnings momentum and the risk that profit growth lags the wider Australian market.

Among recent announcements, Westpac’s full year 2025 net income of A$6,916.0 million and high quality earnings give useful context for this new debt. The enlarged secured funding base from the euro issues and the reset on the GBP 500.0 million floating rate notes sit alongside those results as part of how Westpac manages its cost of funds, which matters when earnings growth is already expected to trail the broader market.

Yet, while funding looks well supported, investors should be aware that slower forecast earnings growth than the Australian market could…

Read the full narrative on Westpac Banking (it’s free!)

Westpac Banking’s narrative projects A$24.9 billion revenue and A$7.9 billion earnings by 2029. This requires 4.2% yearly revenue growth and about A$1.0 billion earnings increase from A$6.9 billion today.

Uncover how Westpac Banking’s forecasts yield a A$35.27 fair value, a 17% downside to its current price.

Exploring Other Perspectives

Six members of the Simply Wall St Community place Westpac’s fair value between A$33.47 and A$40.52, underscoring how far opinions can differ. You can weigh those views against the risk that earnings growth is expected to trail the Australian market and consider what that might mean for the bank’s longer term performance.

Explore 6 other fair value estimates on Westpac Banking – why the stock might be worth as much as A$40.52!

Reach Your Own Conclusion

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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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