Westpac Reports Higher Q1 Profit Amid Loan Growth, Awaits RBA Rate Cut

Westpac Banking Corp, Australia's second-largest mortgage lender, posted a first-quarter net profit of A$1.7 billion ($1.08 billion) for the three months ended December 31, up from A$1.5 billion a year earlier. However, the profit declined 9% compared to the average quarterly performance in the second half of 2024 due to hedge accounting trends.

The bank reported a 2% rise in domestic housing loans and a 3% increase in business loans during the period. Loan repayments overdue by more than 90 days dropped to 1.03% at December’s end, down 9 basis points from September.

CEO Anthony Miller acknowledged ongoing challenges from high interest rates and cost-of-living pressures but expressed optimism about potential relief from the Reserve Bank of Australia's anticipated rate cut, possibly as soon as tomorrow. He noted that easing inflation could support households and business activity.

Westpac's net interest margin fell 2 basis points from the second half of last year to 1.81%, reflecting competitive mortgage markets and a shift towards lower-spread savings and term deposits. The bank's common equity tier 1 ratio, a key measure of financial strength, stood at 11.9% at the quarter's end, down from 12.3% a year ago.

Westpac’s results highlight its resilience amid economic challenges, with growth in both mortgage and business loans. The potential rate cut by the RBA could provide much-needed relief to borrowers, boosting economic activity and financial stability.