Australia’s Westpac Banking Corp reported a decline in its annual profit on Monday, while projecting strong demand for housing and business credit in 2025 as the nation’s central bank prepares to adopt an easing stance. According to a statement from the bank, several central banks have transitioned to an easing cycle, and the Reserve Bank of Australia (RBA) is expected to follow suit in 2025, which is anticipated to benefit many households and businesses.
Westpac also announced an increase in its buyback program by A$1 billion. The Reserve Bank of Australia has maintained steady interest rates for nearly a year following a series of hikes, raising the cash rate by 425 basis points to 4.35% since May 2022.
As Australia’s third-largest lender by market value, Westpac experienced a 3% decrease in profit for the year ending September 30, totaling A$6.99 billion ($4.62 billion). This decline was attributed to rising costs and significant competition in the mortgage market. Despite this, the result surpassed an LSEG estimate of A$6.50 billion.
The bank’s net interest margin, which is a critical profitability indicator, narrowed slightly to 1.93% from 1.95% in the previous year, due to competitive pressures in mortgage pricing. As rising interest rates have increased mortgage repayment costs for borrowers and heightened competition, Australian retail banks are being pushed to broaden their revenue sources beyond traditional home loans.
Westpac also declared a higher final dividend of 76 Australian cents per share, an increase from 72 Australian cents the previous year. The exchange rate at the time was $1 = 1.5147 Australian dollars.
