Westpac Annual Profit Falls Amid Tough Home-Lending Competition

Australia’s Westpac Banking Corp reported a slight drop in annual profit but managed to beat analyst expectations, pushing its shares up nearly 3%. The bank is focusing on increasing its market share in the highly competitive home-loan sector.

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As Australia’s third-largest bank by market capitalization, Westpac expects credit growth to moderate through 2025 and stabilize in 2026. Rising interest rates and lower consumer spending are cooling both the economy and the housing market. However, strong employment levels and accumulated savings are helping reduce defaults and arrears.

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In recent years, Australian banks have streamlined operations to concentrate on home lending, intensifying competition in the mortgage space. Westpac’s home-loan growth has lagged behind major rivals, but CEO Anthony Miller said the bank is deliberately prioritizing quality growth, expanding its team, and improving its loan approval systems. The strategy also involves relying less on mortgage brokers to strengthen margins.

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For the fiscal year ending September 30, Westpac reported a net profit after tax of A$6.99 billion ($4.54 billion), slightly below last year’s A$7.11 billion but above market forecasts. The bank’s net interest margin fell marginally by one basis point to 1.94%, reflecting strong competition for both loans and deposits.

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Shares closed 2.8% higher, outperforming the broader S&P/ASX200 index, which remained flat.

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Westpac’s home lending portfolio now stands at A$497 billion, a 5% increase from last year, though competitors such as Commonwealth Bank, NAB, and ANZ are expanding faster. Its consumer division contributed roughly 33% of total profit, reinforcing its position as the main driver of earnings. The bank holds a 21% share of the national mortgage market, trailing Commonwealth Bank’s 25%.

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Credit quality remains solid, with loans overdue by more than 90 days falling to 0.83% from 1.05% a year earlier. Loans showing early signs of stress also decreased slightly to 1.36% of total lending. Analysts credited lower bad-debt expenses and strong credit performance for the stable results. Westpac’s strong capital position was further supported by the sale of its A$21.4 billion RAMS mortgage portfolio.

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Operating expenses rose 9% to A$11.9 billion, driven by restructuring costs, technology upgrades, and wage increases due to new frontline hires. The bank declared a final dividend of 77 Australian cents per share, bringing the total annual payout to A$1.53, a 76% payout ratio, slightly higher than last year.