ASX-listed Westpac Banking Corporation (AU:WBC) has struck a deal with Australia-based non-lender Resimac Group (AU:RMC) to sell its auto finance loans book. The expected value of the deal ranges between AU$1.4 billion and AU$1.6 billion upon completion. Following the news, WBC shares fell 1.3% today.
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Westpac Banking Corporation is an Australian financial institution serving approximately 14 million customers.
Westpac Offloads Auto Finance Loans
With this deal, Westpac will completely exit the auto finance loan business. Earlier in 2021, the bank partially sold its auto finance business to U.S.-based private equity firm Cerberus Capital Management to enhance its focus on its core banking operations.
For Resimac, the acquisition aligns with the growth objectives of its asset finance division. In recent years, Resimac has completed several business and portfolio acquisitions.
The transaction is expected to be finalized in the first half of 2025 and is not anticipated to significantly affect Resimac’s financial results for FY25.
Is Westpac a Good Share to Buy?
Overall, analysts hold a bearish view of WBC stock. Last week, analyst Andrew Triggs from J.P. Morgan confirmed his Sell rating on WBC stock. However, Triggs raised his price target from AU$25.8 to AU$32.34, predicting 5.27% upside potential. This adjustment was primarily prompted by the bank’s release of a business spotlight update.
According to this update, Westpac’s lending growth has been solid, resulting in a stable market share. On the other hand, higher interest rates and inflation are affecting SME businesses, particularly in the retail trade and hospitality sectors. Similarly, wholesale trade and manufacturing customers are facing challenges from inflation and supply chain constraints. Despite these issues, the bank’s business and wealth credit quality continues to demonstrate resilience.
What Is the Prediction for Westpac Shares?
According to TipRanks’ analyst consensus, WBC stock has received a Moderate Sell rating based on six Sells, two Holds, and one Buy recommendation. The Westpac share price target is AU$24.74, which is 19.5% lower than the current share price.
