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Westpac Banking Corporation has posted a full-year profit of $6.97 billion for the 12 months to September 30, a 2 per cent fall from last year as stiff competition in the lending market and rising costs weighed on results.
Excluding one-off “notable items,” cash earnings came in slightly lower at $6.92 billion, down 1 per cent on the prior year. The result was marginally ahead of analyst forecasts and underpinned by continued demand for mortgages and solid credit quality.
The country’s third-largest lender declared a fully franked total dividend of $1.53 per share, with a final payout of 77 cents.
Lending volumes rose 6 per cent overall, although growth in Australian home loans — up 5 per cent — lagged the broader banking system. Westpac’s net interest margin slipped by one basis point to 1.94 per cent amid what it called “persistent competition” for both loans and deposits. Margins improved slightly in the second half, up 3 basis points on the first six months.
Chief executive Anthony Miller said the bank’s balance sheet remained strong despite pressures on profitability. “We’ve managed margins in a competitive environment and our capital position is strong, providing us with plenty of flexibility as we execute our strategy,” he said.
Read more: Pepper Money moves on $30b RAMS deal
Miller, who took over in December, has been restructuring the bank’s leadership team, cutting roles and drawing talent from rival institutions. He has also accelerated efforts to modernise technology systems and simplify operations.
Operating expenses climbed 9 per cent to $11.9 billion, reflecting higher wage and technology costs, as well as $273 million in restructuring charges linked to its ongoing transformation program.
Credit impairment charges improved to 5 basis points of average loans, compared with 7 basis points a year earlier. The bank said household stress was easing as cost-of-living pressures moderated, and that business defaults remained low.
In a separate announcement to the ASX, Westpac said it had agreed to sell its $21.4 billion RAMS mortgage portfolio to a consortium comprising Pepper Money, KKR, and PIMCO — a transaction expected to boost its common equity tier 1 capital ratio by 20 basis points.
For mortgage professionals, the figures highlight the delicate balancing act facing Australia’s major banks: defending market share in an intensely competitive home loan environment while managing the rising costs of transformation and compliance.
