Key Takeaways

  • Westpac (ASX: WBC), a big-four Australian bank, reported 1H26 results recently with net profit excluding notable items of about A$3.5 billion, roughly flat year on year.
  • Loans and deposits grew around 7%, Australian mortgages grew about 7% year on year (excluding RAMS), and return on tangible equity was near 11%.
  • CEO Anthony Miller is leading a growth-and-transformation agenda built on five strategic priorities.
  • A Chief Transformation Officer has been appointed to run the UNITE simplification program, central to the transformation agenda.
  • The strategic push is balanced against near-term headwinds: net-interest-margin compression and elevated upfront UNITE costs weighed on 1H26 earnings.

Westpac Banking Corporation (ASX: WBC), one of Australia's big-four banks, is pursuing what can reasonably be described as its next growth push, and the question of how much fresh momentum it is building has a nuanced answer. Under chief executive Anthony Miller, the bank is advancing a growth-and-transformation agenda built on five strategic priorities, supported by a simplification program known as UNITE, run by a newly appointed Chief Transformation Officer. Yet the near-term financial picture is more measured. In its 1H26 results, announced on 5 May 2026, Westpac reported net profit excluding notable items of about A$3.5 billion, roughly flat, or up around 1%, on the prior year. Loans and deposits grew around 7%, Australian mortgages grew about 7% year on year (excluding RAMS), and return on tangible equity was near 11%. At the same time, the half featured net-interest-margin compression and elevated upfront UNITE costs, representing a near-term earnings headwind. The honest characterisation, therefore, is of a confirmed strategic push at Westpac (ASX: WBC) proceeding alongside soft near-term earnings.

What has happened?

Recently, Westpac announced its results for the first half of the 2026 financial year. According to those results, net profit excluding notable items was about A$3.5 billion, roughly flat year on year, or up by around 1%. This headline outcome reflected a combination of volume growth and margin pressure.

On the growth side, loans and deposits each grew around 7%, and Australian mortgages grew about 7% year on year, excluding the RAMS business. Return on tangible equity, a measure of profitability relative to shareholders' tangible equity, was near 11%.

Alongside these figures, the results reflected net-interest-margin compression, meaning the difference between what the bank earns on lending and pays on funding narrowed, and elevated upfront costs associated with the UNITE simplification program. These two factors were a headwind to near-term earnings, helping explain why solid volume growth translated into roughly flat profit.

The distinction between notable items and underlying results is worth noting. Reporting net profit excluding notable items is a common approach that seeks to show the performance of the core business by setting aside one-off or unusual charges and gains. Investors typically consider both the underlying and the statutory figures to form a rounded view, and the company's results provide the detail behind each.

Why the development matters

This development matters because it shows a major bank attempting to grow and transform simultaneously, and the tension between those objectives is instructive. Volume growth of around 7% in loans and deposits indicates the bank is expanding its business. Yet the roughly flat profit, driven in part by margin compression and transformation costs, shows that growth in volumes does not automatically translate into higher near-term earnings.

For a big-four bank, which sits at the centre of the Australian financial system, the balance between investing for the future and delivering current returns is closely watched. The strategic agenda under Anthony Miller signals an intent to reshape the bank for the longer term, while the near-term costs of doing so are visible in the current results.

Understanding this balance is important for a clear-eyed view of the bank's position: the strategy is confirmed and underway, but its financial benefits, if realised, would be expected to emerge over time rather than immediately.

This is a familiar pattern for large organisations undertaking significant change. The costs of transformation tend to fall early, while any benefits accrue later and are contingent on successful execution. Presenting the strategy honestly therefore means acknowledging both the ambition and the near-term cost, without assuming that the intended outcomes are certain to be achieved.

Company background and business model

Westpac is one of Australia's four major banks, providing a broad range of financial services to consumers, businesses and institutions. Its activities span mortgages and consumer lending, business and institutional banking, deposits and related financial services. Mortgages, in particular, are a significant part of its Australian business.

The business model relies substantially on net interest income, the difference between interest earned on loans and interest paid on deposits and other funding. This makes the net interest margin a key driver of profitability, and it is why margin compression, as seen in 1H26, can weigh on earnings even when lending volumes grow.

As a large, established institution, Westpac also carries significant operational scale and complexity. Simplifying that complexity, a goal of the UNITE program, is one way the bank is seeking to improve how it operates over time.

Deposits are an important source of funding for a bank, and growth in deposits alongside loans can support a more balanced funding position. The roughly 7% growth in both loans and deposits reported in 1H26 suggests the bank grew its lending and its funding base broadly in step, though the profitability of that growth was tempered by the margin environment.

The transformation agenda and UNITE at Westpac (ASX: WBC)

Central to the growth push at Westpac (ASX: WBC) is a transformation agenda led by chief executive Anthony Miller and built on five strategic priorities. To drive one core element of this agenda, the bank has appointed a Chief Transformation Officer to run the UNITE simplification program.

UNITE is described as a simplification program, aimed at reducing complexity across the organisation. Simplification initiatives at large banks typically seek to streamline systems, processes and structures, with the intention of improving efficiency and the customer and employee experience over time. Such programs commonly involve significant upfront investment, which can weigh on earnings in the near term before any intended benefits are realised.

That pattern is visible in the 1H26 results, where elevated upfront UNITE costs contributed to the near-term earnings headwind. The strategic rationale is longer-term, while the costs are immediate, which is a common feature of major transformation efforts. The extent to which UNITE delivers its intended benefits will be demonstrated over time through the bank's reporting.

The appointment of a dedicated Chief Transformation Officer to lead UNITE signals an intent to give the program clear accountability and focus. Governance and execution discipline are often decisive in whether large transformation programs achieve their aims, and dedicated leadership is one mechanism through which a bank can seek to manage that risk. The results of the program, however, will only become clear through subsequent performance.

Strategic implications

Strategically, the agenda signals Westpac's intent to position itself for growth while modernising and simplifying its operations. The combination of volume growth in loans, deposits and mortgages with a structured transformation program suggests an approach that seeks both to expand the business and to improve how it functions.

The near-term financial trade-off is an important implication. Investing in transformation and absorbing margin pressure can constrain current earnings, as the roughly flat 1H26 profit illustrates. The strategic bet is that these investments and the pursuit of growth will support the bank's performance over the longer term, though that outcome is not assured and will depend on execution and market conditions.

The appointment of a dedicated Chief Transformation Officer underscores the seriousness with which the bank is approaching the UNITE program, indicating that transformation is a central rather than peripheral part of its strategy.

Sector and competitive backdrop for Westpac (ASX: WBC)

The Australian banking sector is highly competitive, with the big-four banks, including Westpac (ASX: WBC), competing alongside regional banks and other lenders across mortgages, deposits and business lending. Mortgage competition, in particular, can influence margins, as lenders balance growth in lending volumes against the pricing needed to win and retain customers.

Net interest margins across the sector are also influenced by broader interest-rate conditions and funding costs. The margin compression Westpac reported in 1H26 reflects dynamics that can affect banks generally, depending on competitive and economic conditions.

Against this backdrop, initiatives to grow lending while simplifying operations are common strategic themes among large banks seeking to improve efficiency and competitiveness. Westpac's agenda sits within that broader industry context, and its relative success will be judged over time against both its own targets and the performance of peers.

Interest-rate settings are a further important influence on the sector. Movements in official rates and in funding markets feed through to both lending rates and deposit costs, affecting margins in ways that individual banks cannot fully control. The margin compression Westpac reported should be read partly in this system-wide context, rather than as a company-specific phenomenon alone.

Potential opportunities

Several potential opportunities are associated with Westpac's agenda. If the growth in loans, deposits and mortgages is sustained and complemented by successful simplification, the bank could improve its efficiency and competitive position over the longer term. A simpler operating model may, if delivered, support better service and lower ongoing costs.

Return on tangible equity near 11% provides a measure of current profitability against which future progress can be assessed. Should the transformation deliver its intended benefits and margin pressures ease, there may be scope for improved outcomes over time. These are possibilities rather than assured results, and they depend heavily on execution, competitive dynamics and economic conditions.

Equally, a well-managed simplification of a complex bank can, over time, reduce operating costs and improve responsiveness, which are qualities that can matter in a competitive market. Whether these potential gains are realised, and to what degree, is precisely the question that the bank's future results will help to answer.

Material risks and uncertainties

The agenda also carries risks and uncertainties. Large transformation programs such as UNITE involve significant upfront costs and execution risk, and their intended benefits are not guaranteed to materialise on any particular timetable. The elevated upfront costs seen in 1H26 illustrate the near-term earnings impact of such initiatives.

Net-interest-margin compression is a further uncertainty, as margins can be affected by competition, funding costs and interest-rate conditions that are outside the bank's control. Roughly flat near-term profit shows how these factors can offset volume growth.

Broader risks common to banking also apply, including sensitivity to economic conditions, credit quality and the housing market, given the significance of mortgages to the business. None of these points involves any allegation of wrongdoing; they are the ordinary risks and uncertainties associated with executing a growth-and-transformation strategy at a major bank.

What investors may watch next

Investors may watch how Westpac's subsequent results reflect progress on both growth and transformation. Trends in the net interest margin will be important, as will the trajectory of UNITE costs and any indications of the benefits the program is intended to deliver. Continued growth in loans, deposits and mortgages, and movements in return on tangible equity, will provide further read-throughs on execution.

Commentary from the bank on its five strategic priorities and the transformation agenda will offer context on how the strategy is progressing. As always, the bank's own results, investor presentations and ASX announcements are the authoritative sources for these developments, and outcomes should be assessed as they are reported rather than assumed in advance.

Balanced conclusion

Westpac (ASX: WBC) is genuinely pursuing its next growth push, with a confirmed growth-and-transformation agenda under chief executive Anthony Miller, built on five strategic priorities and anchored by the UNITE simplification program under a dedicated Chief Transformation Officer. The 1H26 results, announced recently, showed solid volume growth, with loans and deposits up around 7% and Australian mortgages up about 7% (excluding RAMS), and return on tangible equity near 11%. Yet net profit excluding notable items was roughly flat at about A$3.5 billion, reflecting net-interest-margin compression and elevated upfront UNITE costs, a near-term earnings headwind. The honest picture is of strategic ambition proceeding alongside soft near-term earnings, with any longer-term benefits dependent on execution. Frequently Asked Questions