Key Highlights

• Westpac reported net profit excluding notable items of $1.8bn, up 2% on the prior quarterly average, and statutory net profit of $1.8bn, up 3% on that average.

• Housing Credit rose 7% year on year and customer deposits rose 7%, which suggests growth in both lending and funding.

• Risk-weighted Assets were $465bn, up $6.2bn, or 1.3%, since March.

• The 2% and 3% profit increases are measured against the average of the previous two quarters, not against a year earlier, so they describe momentum rather than annual growth.

What does a steady quarter look like for a large bank, and is steady good enough? Westpac's (ASX:WBC) third-quarter FY26 update, released on 10 August 2026, reported profit of about $1.8bn, a net interest Margin unchanged at 1.89% and a CET1 ratio of 12.1%. The numbers point to stability rather than acceleration. For a bank whose Investment case has often turned on execution, the question is how much growth it can add without weakening the margin or Capital position.

The central development: a stable quarter

Westpac reported net profit excluding notable items of $1.8bn, up 2% on the prior quarterly average, and statutory net profit of $1.8bn, up 3% on that average. Net Operating Income was $5.7bn, up 1%. Net interest margin (NIM), which measures net interest income relative to average interest-earning assets, was 1.89% and steady.

Business and Revenue drivers

Westpac earns most income from net interest on home loans, Business lending and deposits, plus fees and markets income. It is a major residential lender, so housing credit growth is a key driver. Housing credit rose 7% year on year and customer deposits rose 7%, which suggests growth in both lending and funding. Deposit growth at a similar rate to loans eases reliance on wholesale funding, which is typically more expensive and sensitive to market conditions.

A stable NIM at 1.89% matters because the sector has faced competition for mortgages and deposits. Holding the margin while growing lending in a market where home lending applications have softened at another major bank is a positive, but it is not proof that the position will persist. NAB's own third-quarter margin was lower at 1.79%, though different business mixes make direct comparison imperfect.

Capital and risk-weighted assets

The CET1 ratio was 12.1% at Level 2. Risk-weighted assets were $465bn, up $6.2bn, or 1.3%, since March. CET1 relative to risk-weighted assets is the main yardstick of capital strength.

Growth in risk-weighted assets consumes capital. A 1.3% rise in a quarter is a moderate pace, but if housing and business lending accelerate it will absorb Earnings that might otherwise go to shareholders. That trade-off is central to Westpac's capital management.

Credit quality and provisions

Impairment charges were described as low, although no figure was given. Total provisions were $5.3bn.

Low impairments flatter earnings in a benign credit cycle. A rise in unemployment, falling property prices or higher rates could change that quickly. Investors should watch arrears, stressed exposures and the size of provision overlays.

Reading the growth rates

The 2% and 3% profit increases are measured against the average of the previous two quarters, not against a year earlier, so they describe momentum rather than annual growth. Excluding notable items strips out one-offs such as restructuring or legal provisions, but the statutory figure includes them, and the closeness of the two numbers here suggests notable items were small in the quarter. Housing credit and deposit growth of 7% are year-on-year measures, which makes them a different yardstick again. Mixing these bases is a common source of confusion when comparing banks, so each figure should be read with its own comparison period.

Sector and competitive position

Westpac is one of Australia's four major banks. Commonwealth Bank is larger, with a full-year cash profit of $10,982m for FY26 to June 2026 and a net interest margin of 2.05%, while NAB focuses on business banking. Westpac's margin of 1.89% sits between the two on these reported measures, though the periods and definitions differ.

What the update does not tell us

A quarterly update is not a full set of accounts. Until then, the best evidence is the quarterly direction of margin, capital and asset quality, and each should be read with its own comparison basis.

Risks and what to monitor

- Margin: competition for deposits and mortgages could erode the 1.89% NIM.

- Credit quality: low Impairment charges may not last; rising Unemployment or falling house prices would test provisions.

- Capital: growth in risk-weighted assets and any regulatory change could constrain capital returns.

- Housing market: 7% housing credit growth depends on conditions that can change.

Key dates are the full-year result, any Dividend and capital management announcement, and the next quarterly disclosure of margin and impairments.