Morgan Stanley analysts have reduced their target price for Australia’s Westpac, from A$21 to A$20.60.

The bank reported a quarterly cash profit of A$1.8 billion on Monday, which was in line with consensus expectations.

However, its shares fell by over 2% due to an unexpected increase in expenses for the quarter.

Morgan Stanley labels the expense trends and associated management commentary as disappointing.

Additionally, the bank’s core margin of 1.86% in the 3rd quarter of 2023 was 4 basis points lower than the first half of 2023 and a decline of estimated 2 basis points quarter over quarter.

Consequently, Morgan Stanley has increased Westpac’s expense forecasts for FY24 and FY25 in the range of 5% to 6%.

Westpac’s stock has decreased 11.7% this year, till the last close.

Westpac (ASX:WBC) is one of Australia’s largest banks, offering a variety of financial services such as retail, business and institutional banking, and wealth management.