Westpac (ASX: WBC) has kicked off the first quarter of FY25 with a $1.7 billion unaudited net profit, reflecting balance sheet strength and steady operating momentum, despite economic headwinds. Excluding notable items, net profit climbed 3% to $1.9 billion, driven by loan and deposit growth and higher non-interest income.
CEO Anthony Miller highlighted the bank’s resilience and customer focus, saying:
“This has been a solid first-quarter performance, reflecting our strong financial position, balance sheet growth, and service excellence.”
Key Financial Highlights
- $1.7 billion unaudited net profit
- $1.9 billion net profit excluding notable items (up 3% on 2H24 average)
- 1.82% net interest margin (NIM), with core NIM at 1.81% (down 2bps on 2H24)
- 11.9% CET1 capital ratio, above the target range of 11.0%–11.5%
- $14.4 billion in customer deposit growth
- $13.4 billion in loan growth, including:
- 2% increase in Australian housing loans (excluding RAMS)
- 3% growth in business loans
- 6% growth in institutional loans
Navigating Challenges: Margins, Inflation, and Rates
Westpac’s net interest margin (NIM) came in at 1.82%, reflecting a competitive mortgage market and a shift toward lower-spread savings and term deposits. Despite this, higher earnings on capital and hedged deposits provided some support.
Miller acknowledged ongoing cost-of-living pressures but remained optimistic, suggesting the RBA could cut rates soon, offering relief to households and boosting business activity.
Customer-Focused Initiatives
Westpac is making significant strides in customer service and safety, including:
- Hiring 200 additional small business and SME bankers by 2027
- Rolling out digital cash flow management tools for businesses
- Launching multiple offset accounts for greater flexibility
- Allowing customers to convert credit card rewards into Everyday Rewards points
- Strengthening fraud protection measures
- Reaffirming its role as the NSW Government’s primary banking partner
Capital Strength and Share Buybacks
Westpac remains well-capitalized, with a CET1 ratio of 11.9%. The on-market share buyback program is 62% complete, with $3.5 billion committed.
Meanwhile, impairment charges remain low at just 5 basis points of average loans, reflecting strong customer resilience despite economic pressures.
What’s Next?
With solid capital buffers, steady earnings growth, and strong customer engagement, Westpac is well-positioned for the months ahead. Investors will now watch for RBA rate decisions and further updates on cost management and lending trends.
