Australia’s Westpac Banking Corporation reported a 1% year-on-year decline in net profit after tax to $2.13 billion (A$3.32 billion) for the six months ended March 31, 2025.
The result, announced on May 5, comes as the bank faces a challenging environment marked by rising operating expenses, intense competition, and growing global trade uncertainties.
Key Financial Highlights
- Net Profit: Westpac’s net profit slipped 1% to $2.13 billion (A$3.32 billion) compared to the same period last year, falling short of analyst expectations, which had forecast a 3% increase to A$3.43 billion.
- Net Interest Income: The bank’s net interest income rose 2% to $6.18 billion (A$9.57 billion), supported by growth in home, business, and institutional lending.
- Margins: Core net interest margin (NIM) stood at 1.8%, while the group NIM edged down by one basis point to 1.88%. Margin pressures persisted due to fierce competition in lending and term deposits, as well as a shift toward lower-margin savings accounts.
- Operating Expenses: Costs surged by 6% to A$5.7 billion, driven by increased wages, technology investments, and spending on Westpac’s UNITE simplification program.
- Dividend: Westpac declared an interim dividend of 76 Australian cents per share, up from 75 cents a year ago, but below analyst expectations of 80 cents.
Management Commentary and Strategic Focus
CEO Anthony Miller emphasized the bank’s efforts to actively manage margins and pursue sustainable growth, particularly in business and institutional lending. Australian business lending grew 14% and institutional lending rose 15% over the year, reflecting targeted expansion in these segments.
Miller also flagged the impact of shifting global trade policies and heightened geopolitical uncertainty, noting these factors have affected market conditions and funding for the bank. He described geopolitical risk as “as high as it has been for a very long time,” though he expressed confidence in Australia’s resilience.
Market and Sector Context
Westpac’s profit miss was largely attributed to higher expenses and hedging-related impairments, which offset gains in lending and deposits. The result comes against the backdrop of the Australian Labor Party’s recent election victory, with housing affordability remaining a central policy focus.
The bank’s interim dividend, while slightly higher than last year, was below market expectations, reflecting a cautious approach amid ongoing margin and cost pressures.