Here's how it did it
Westpac shares have staged a remarkable recovery in the past week following a continuous dip in share performance since mid-January and a low of $21.67 on March 08.
The bank is up more than 10% this year to date and has a price target of $26.96, according to Bloomberg Intelligence, leading investors to rally its share price ahead of other banking majors in 2022.
Investing services company, the Motley Fool Australia, analysed the wider sector and found that ASX financial institutions have ‘clawed back’ gains this year despite the volatility of the last two to three months.
It identified the constant debate of inflation and interest as one of the biggest sector-specific tailwinds.
Read next: Westpac chief on the state of Australian mortgages
Higher inflation is sure to impact household budgets, explained Bloomberg economist James McIntyre, prompting quick action from the Reserve Bank of Australia (RBA).
Any move by the RBA to tighten its policy and contain the pressures of higher inflation would involve a pull-through into the mortgage and credit markets, McIntyre said, which in turn would mean more income fed into banks as profit and free cash flow.
Read next: Governor issues warning that the RBA's hand may soon be forced
Westpac recently projected a dividend growth of $1.19 per share in FY22 moving up to $1.60 in FY23 – a jump of 34%, the Motley Fool noted, concluding that macro-level tailwinds benefitting the sector at large have transposed to and benefitted the bank’s share price as well.
