Consumers will likely have it tougher in 2023 as they feel the full impact of interest rate hikes and the continuing high cost of living, Australia’s second-biggest lender has warned.
At Westpac's annual general meeting in Melbourne on Wednesday, CEO Peter King said the bank was “carefully watching” the impacts of higher interest rates on customers despite credit metrics having shown an improvement this year to date.
King said, Westpac expects “the combination of rising interest rates and the increase in cost of living to be felt more fully by consumers and businesses after Christmas,” AAP Newswire reported.
The comments follow the Reserve Bank’s eighth consecutive cash rate hike to 3.1%, in its battle to tame red-hot inflation.
Worst affected were the mortgage holders, as Westpac and all other major banks passed on the rate hikes in full, raising fears of a surge in defaults next year as borrowers face increased repayments along with higher living costs.
“There is no doubt that tighter monetary policy and slowing economic growth will impact some customers in the year ahead,” King said. “We are prepared for this cycle given the quality of the loan portfolio and the strength of our balance sheet and provisioning.”
Last month, Westpac reported a better-than-expected full-year profit of $5.7 billion, which was up 4% on the prior year. At the time, the bank said it was yet to see a rise in hardship, with many customers having built up savings over the past two years and nearly two-thirds ahead on their mortgage repayments.
By 1400 AEDT, Westpac shares slipped 1% to $23.43 each in a firm Australian market, AAP Newswire reported.
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