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Highlights

  • Westpac reports 1% decline in NPAT to $3.3 billion but lifts interim dividend to $0.76 per share.

  • Loan book grows 5% to $825 billion, with growth in business and institutional lending.

  • Credit impairment charges fall, indicating improved credit quality and household resilience.

Westpac Banking Corp (ASX: WBC) has delivered a stable but slightly softened half-year result for FY25, as outlined in its HY25 earnings report, with resilient lending growth and improved credit quality offsetting profit pressures from fierce market competition and rising costs.

The underlying net profit after tax (NPAT) dipped 1% to $3.5 billion, while statutory NPAT also fell 1% to $3.3 billion, reflecting subdued earnings growth in a tightening financial environment. Still, the bank increased its interim dividend to $0.76 per share, a modest 1.3% lift year on year.

Margins remain under pressure, with the group net interest margin (NIM) easing by one basis point to 1.88%, and the core NIM down 0.03% from the previous half. Westpac attributed the pressure to ongoing competition in both lending and term deposits but noted it continues to achieve “sustainable growth” in focus areas through active margin management.

On a brighter note, net interest income rose 2% to $9.6 billion, underpinned by a 5% increase in total loans, which now total $825 billion. This was complemented by 7% growth in total deposits, reaching $697 billion, driven in part by a 9% lift in Australian customer deposits.

However, non-interest income slid 3% to $1.4 billion, with a significant 15% fall in trading and other income. Fee income remained flat at $840 million, while net wealth management income showed some strength, climbing 10%.

Operating expenses surged 6% to $5.7 billion, reflecting investments in its UNITE transformation program, rising software and technology costs, and higher staff wages. The bank says UNITE is key to driving long-term efficiencies and improving the customer experience.

In terms of lending performance, Westpac recorded 5% housing loan growth, equal to 0.9x system growth, while business lending rose 14% and institutional lending jumped 15%. 

Notably, the bank saw a reduction in credit impairment charges, which dropped to just 0.06% of average loan balances from 0.09% previously. Westpac noted that Australian households are demonstrating resilience, and that business stress levels remain low.