Westpac Banking Corporation has posted steady half-year results that underscore the contrast between its expanding business lending operations and the intensifying pressures in the home loan market, as it continues to face higher costs and an uncertain global economic climate.
The bank reported a 1 per cent decline in net profit to $3.3 billion for the six months ending March 31, reflecting market-wide challenges and ongoing margin compression. Home lending grew 5 per cent over the period, a pace roughly in line with the broader system, while business loans surged by 14 per cent as the bank aggressively pursued commercial credit growth in sectors such as infrastructure, technology and energy.
Net interest margin (NIM), a key profitability metric, dipped slightly to 1.79 per cent, a result of tighter loan and deposit spreads. For mortgage brokers, the figures point to a continued margin squeeze in retail lending, even as borrowers show signs of greater resilience in the face of cost-of-living pressures and high interest rates.
Chief executive Anthony Miller, delivering his first results update since taking the reins in December, said the bank had seen a drop in credit impairment charges, with fewer customers falling behind on repayments. Mortgage delinquencies of 90 days or more declined in the half, a sign Miller interpreted as evidence that households had adapted to the higher-rate environment. He also noted that the Reserve Bank’s move towards a rate-cutting cycle should provide further support to borrowers in coming months.
While credit quality improved, operating costs increased by 6 per cent to $5.7 billion. This was driven by the continued rollout of Westpac’s multi-year UNITE technology overhaul, a program aimed at streamlining operations and reducing complexity. The bank said 41 of 60 initiatives were currently in progress, with four already completed, and projected total investment of $3 billion over four years.
Westpac continues to navigate a highly competitive mortgage market. Its 5 per cent housing loan growth lagged the system average slightly, suggesting a more measured approach to market share. Mortgage brokers may see this as a shift in strategy that favours pricing discipline and selective origination over volume-led growth.
Miller also warned of broader risks stemming from global instability and trade tensions, pointing to geopolitical uncertainty as a key concern. However, he remained confident in Australia’s economic fundamentals, citing resilient business investment and population growth as supporting factors.
The bank declared an interim dividend of 76 cents per share, unchanged from the prior half-year and just shy of analyst expectations.
For brokers, Westpac’s results highlight an environment where competition remains fierce, but borrower stability and potential rate relief from the RBA could ease pressures. The focus now shifts to how lenders balance margin management with loan growth in a market still recalibrating after rapid rate increases.
