Westpac Annual Profit Dips 2 % but Beats Analyst Forecasts Amid Cost Pressures
Australia’s third-largest lender reports A$6.99 billion profit, bolstered by strong credit quality and non-interest income despite margin compression
Westpac Banking Corporation reported a net profit after tax of A$6.99 billion for the year ended September 30 2025, down 2 % from A$7.11 billion a year earlier, yet ahead of analyst expectations of about A$6.83 billion.
The bank’s net interest margin—a key measure of earnings—narrowed by one basis point to 1.94 %, reflecting intense competition in mortgages and deposits.
Despite this, credit-impairment charges improved, declining to 5 basis points of average loans from 7 basis points a year earlier, thanks to easing cost-of-living pressures on households and low business stress levels.
Operating expenses rose 9 % to A$11.9 billion, driven by one-off restructuring costs of A$273 million, increased technology and transformation spending, and wage growth supporting front-line hiring.
In a strategic move the bank agreed to sell its A$21.4 billion RAMS mortgage portfolio to a consortium including KKR, PIMCO and Pepper Money, a transaction aimed at simplifying Westpac’s balance sheet and enhancing capital flexibility.
During the period, Westpac declared a final dividend of 77 Australian cents per share, up from 76 cents a year earlier, lifting the full-year distribution to A$1.53 per share.
The bank struck a cautious tone on future growth, forecasting moderation in credit expansion in 2025 amid high interest rates and weaker consumption, before expecting stabilisation in 2026.
Chair and management emphasised that the outcome underscores Westpac’s resilience in a challenging environment, pointing to improved credit quality and diversified non-interest income streams as key strengths, even as margin and cost headwinds persist.
The bank’s net interest margin—a key measure of earnings—narrowed by one basis point to 1.94 %, reflecting intense competition in mortgages and deposits.
Despite this, credit-impairment charges improved, declining to 5 basis points of average loans from 7 basis points a year earlier, thanks to easing cost-of-living pressures on households and low business stress levels.
Operating expenses rose 9 % to A$11.9 billion, driven by one-off restructuring costs of A$273 million, increased technology and transformation spending, and wage growth supporting front-line hiring.
In a strategic move the bank agreed to sell its A$21.4 billion RAMS mortgage portfolio to a consortium including KKR, PIMCO and Pepper Money, a transaction aimed at simplifying Westpac’s balance sheet and enhancing capital flexibility.
During the period, Westpac declared a final dividend of 77 Australian cents per share, up from 76 cents a year earlier, lifting the full-year distribution to A$1.53 per share.
The bank struck a cautious tone on future growth, forecasting moderation in credit expansion in 2025 amid high interest rates and weaker consumption, before expecting stabilisation in 2026.
Chair and management emphasised that the outcome underscores Westpac’s resilience in a challenging environment, pointing to improved credit quality and diversified non-interest income streams as key strengths, even as margin and cost headwinds persist.
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