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Highlights

  • WBC's unaudited statutory net profit for 3Q25 was AUD 1.9 billion, up 8% excluding Notable Items.

  • Net Interest Margin increased 5 basis points to a core NIM of 1.85%, with total NIM at 1.99%.

  • Common Equity Tier 1 capital ratio stood at 12.3%, above the 11.0–11.5% target range.

Westpac Banking Corporation (ASX:WBC) has announced an unaudited statutory net profit of AUD 1.9 billion for the three months ended 30 June 2025. Excluding Notable Items, which were related to economic hedges of term funding and provided a small benefit, net profit rose 8% to AUD 1.9 billion. Pre-provision profit increased 6%, driven by a 4% rise in revenue against a 3% increase in expenses.

Revenue and Margin Performance

Net interest income grew by 4%, largely due to an increase in Net Interest Margin (NIM). The total NIM was 1.99%, with the core NIM at 1.85%, 5 basis points higher than the prior period. Liquids contributed 3 basis points, supported by a reduction in liquid and trading assets. Deposits contributed 1 basis point, benefiting from margin management and higher earnings on hedged deposits, despite a shift towards lower-margin savings accounts and competitive pressure on term deposits. Loans added 1 basis point, with improved spreads on New Zealand mortgages and a mix shift towards business lending partially offset by narrower spreads due to competition. Treasury and Markets contributed 14 basis points, up from 12 basis points, supported by favourable interest rate positioning in a volatile market.

Lending and Deposits

Customer deposits increased by AUD 10 billion in the quarter, while gross loans grew by AUD 16 billion. Australian housing loans, excluding RAMS, rose 1%, business lending grew 5%, and institutional lending increased 2%. Non-interest income increased 6%, supported by higher Markets revenue.

Cost and Productivity Measures

Expenses rose 3%, driven by wage growth, increased banker headcount, and planned UNITE investment. The bank is continuing its “Fit for Growth” program, targeting productivity initiatives to manage expense growth.

Credit Quality and Impairments

The financial resilience of Westpac’s customer base contributed to improved credit quality across all segments. Impairment charges were low at 5 basis points of average gross loans. Credit impairment provisions stood at AUD 5.1 billion as at 30 June 2025, which is AUD 1.9 billion above the expected losses of the base case economic scenario. The ratio of credit impairment provisions to credit risk-weighted assets was 1.25%.

Capital and Liquidity Position

The Common Equity Tier 1 (CET1) capital ratio was 12.3%, above the bank’s 11.0–11.5% target operating range. The increase reflected quarterly earnings and a reduction in interest rate risk in the banking book (IRRBB) risk-weighted assets, offsetting the 1H25 dividend payment and lending growth. On a pro forma basis, assuming completion of the remaining on-market share buyback, the CET1 ratio was 12.0%. As of 30 June 2025, 71% of the announced AUD 3.5 billion buyback had been completed.

The average quarterly liquidity coverage ratio stood at 134%, and the net stable funding ratio was 114%, both above regulatory minimums. Year-to-date, Westpac has issued AUD 27 billion in long-term wholesale funding, completing its 2025 funding plan.