Highlights

  • E&P issues ‘Negative’ rating on Westpac with a target price of AUD 28.00.
  • Macquarie Research assigns an ‘Underperform’ rating with a target of AUD 32.00.
  • Westpac reports FY25 net profit of AUD 6.97 billion, down 2% year-on-year.
  • Loans grew 6% to AUD 851.9 billion, while customer deposits rose 7%.
  • Final ordinary dividend declared at 77 cents per share, taking total dividends to AUD 1.53 per share for FY25.

Westpac Banking Corporation (ASX:WBC) has drawn a cautious response from leading brokerages following the release of its full-year 2025 results. Both Evans & Partners (E&P) and Macquarie Research have issued subdued ratings on the bank.

E&P has assigned a ‘Negative’ rating on Westpac with a target price of AUD 28.00, while Macquarie Research maintained an ‘Underperform’ stance with a price target of AUD 32.00.

Despite maintaining a favourable balance sheet and capital position, analysts appear to be taking a conservative view as the bank navigates margin pressures and rising operational costs.

FY25 Financial Performance

For the financial year ended 30 September 2025, Westpac reported a net profit of AUD 6.97 billion, down 2% compared to FY24. Excluding notable items, the bank’s operating performance remained broadly stable, supported by resilient lending activity and deposit growth.

Net interest income rose 3% to AUD 19.47 billion, reflecting higher average interest-earning assets. However, the net interest margin (NIM) eased by 1 basis point to 1.94%, as ongoing competition in lending and deposits continued to weigh on spreads.

Non-interest income increased 5% to AUD 2.99 billion, driven by improved performance in markets, wealth management, and higher fee income.

Westpac’s loan book expanded 6% to AUD 851.9 billion, including a 5% increase in Australian housing loans, while business lending rose 15% and institutional lending surged 17%. Customer deposits also grew a robust 7% to AUD 723.0 billion.

Operational Metrics and Capital Position

Operating expenses increased 9% to AUD 11.92 billion, impacted by restructuring costs of AUD 273 million and ongoing investments in technology and compliance programs. Excluding one-offs, underlying expenses were up 6%.

The credit impairment charge was maintained at 5 basis points of average loans, down from 7 basis points in FY24.

Westpac’s Common Equity Tier 1 (CET1) capital ratio improved slightly to 12.5%, up 4 basis points from the previous year.

Dividends and Returns

The Board declared a final ordinary dividend of 77 cents per share, bringing the total dividend for FY25 to AUD 1.53 per share, up 1% from FY24. Return on tangible equity stood at 11.0%, while earnings per share remained flat at 204 cents.