Sydney, June 26, 2026, 03:06 AEST
- Westpac closed Thursday at A$35.06, dropping 2.01%. Trading volume was about 18% higher than usual.
- Judo dropped 40.3% after it flagged three bad loans that will push its estimated FY26 cost of risk to A$116 million to A$122 million.
- Westpac’s Business & Wealth business lending stood at A$121 billion as of March 31, a 13% increase year on year.
Westpac Banking Corporation (ASX:WBC) heads into Friday after dropping A$0.72 on Thursday. The move came as a credit shock from Judo Capital Holdings Limited (ASX:JDO) put pressure on Australian bank stocks. Westpac’s loss erased around A$2.46 billion in market value based on its 3.42 billion shares. That’s about 3.7 times more than the estimated A$660 million Judo lost.
Westpac finished at A$35.06, coming off an intraday low of A$34.96. The S&P/ASX 200 slipped 0.68% to 8,748.70, while Westpac dropped by nearly triple that pace. Shares closed 19.1% under the 52-week top of A$43.32.
Judo flagged higher expected credit costs for FY26, mostly because of provisions on three exposures in different sectors. The bank now sees loans at least 90 days overdue or impaired hitting around 3% of gross loans and advances by June 30. Forecast pre-tax profit for FY26 is A$163 million to A$169 million. CEO Chris Bayliss said recent credit results came from “a small number of customers”.
JPMorgan bank analyst Andrew Triggs said the three-borrower explanation “provides only limited comfort in our view”. Triggs sees an 8% cut to FY26 earnings estimates and a 15% cut for FY27, according to an ABC report. ABC News
National Australia Bank Limited (ASX:NAB) slid 3.35%. ANZ Group Holdings Limited (ASX:ANZ) dropped 2.19% and Commonwealth Bank of Australia (ASX:CBA) was off 1.27%. Westpac fell about in line with the group. Selling hit the whole sector, hinting at a broad credit read-through and not just a single Westpac issue.
Westpac has been singled out by Fitch Ratings this month after data showed it led the big Australian banks with 39% growth in business loans during the three years through March 2026. Fitch said the jump in business lending could create pressure on asset quality.
Westpac said in its half-year presentation that Australian business lending rose 16% in the year through March. The group impairment charge moved up to 10 basis points of average loans from 6 basis points. Stressed exposures dropped to 1.16% of total committed exposure from 1.28% in September.
The Business & Wealth unit posted a business-lending balance of A$121 billion, about 8.4 times bigger than Judo’s A$14.4 billion gross-loan balance. One basis point on the unit’s A$121 billion book is around A$12.1 million. The unit’s impairment charge came in at 36 basis points of average loans, up from 24 basis points last year. Total stressed exposures dropped to 4.58% from 5.26%.
Westpac is set to pay its fully franked A$0.77 interim dividend to shareholders on Friday. The payout equals 2.2% of the stock’s closing price on Thursday before franking credits. The DRP price came in at A$36.08, or roughly 2.9% higher than Thursday’s close.
