Westpac Posts Flat Annual Profit as Rates Weigh on Margins — Update

By Stuart Condie

SYDNEY--Westpac Banking Corp reported a flat annual profit as central-bank interest-rate rises and competition for mortgages weighed on margins.

Westpac, which is Australia's third-largest bank by market capitalization, on Monday reported a net profit excluding notable items for the 12 months through September of 6.99 billion Australian dollars, equivalent to US$4.92 billion.

Notable items included unrealized gains and some hedging items.

On a statutory basis, net profit fell by 1% to A$6.81 billion. Revenue rose by about 1% to A$22.60 billion and Westpac held its final dividend at A$0.77 a share.

Excluding notable items, net interest margin--a key measure of profitability closely watched by analysts--fell by 7 basis points to 1.87%. Its fiscal second-half margin of 1.86% was down by 9 basis points on the same period a year earlier.

Lending grew 5% to A$901 billion over the fiscal year, but net interest income rose by just 1% to A$19.7 billion. Mortgages and consumer deposits both grew by 7% over the period.

Westpac said the average number of monthly mortgage applications in the September quarter was down by 15% on the same period a year earlier, albeit still 4% higher than the five-year average.

Major lenders have reported steep on-year declines against the backdrop of rising interest rates and changes to property related tax concessions. On Sept. 30, the Reserve Bank of Australia raised the cash rate for the fourth time in 2026 as it tries to tame inflation.

Westpac's economists expect house prices to fall by 11% over the current cycle.

Impairment charges more than doubled to A$864 million from a year earlier, but were lower in the second half than in the first. Operating expenses fell about 1% to A$11.78 billion, which the lender said was partly due to simplifications in its operating model.

Write to Stuart Condie at stuart.condie@wsj.com

(END) Dow Jones Newswires

November 01, 2026 18:00 ET (23:00 GMT)