Westpac Annual Profit Flat as Rate Rises and Mortgage Rivalry Squeeze Margin

what happened

Australian lender Westpac Banking Corp posted an annual profit that was roughly flat, according to Dow Jones Newswires. Higher interest rates set by central banks and rivalry for home loans eroded the bank's margins over the period.

For the 12 months to September, profit excluding one-off items reached 6.99 billion Australian dollars, the equivalent of US$4.92 billion. Those one-off items comprised mark-to-market gains and hedging effects. Under statutory reporting, net profit dropped 1% to A$6.81 billion, while revenue climbed about 1% to A$22.60 billion.

Excluding one-offs, net interest margin, a closely tracked gauge of profitability, slid 7 basis points to 1.87%. The fiscal second-half margin came in at 1.86%, 9 basis points lower than a year earlier.

why it matters

The mix of steady earnings and a thinner margin suggests lending income is under pressure even as revenue grows. Investors in Australian bank shares and the ASX 200 will be watching whether margins stabilise in coming periods, and rate expectations tie the result into the wider read on AUD/USD.

market impact

Australian bank shares: flat profit with a narrower margin gives a mixed signal

• ↔Westpac shares (WBC) mixed — flat profit and revenue growth offset by a narrower net interest margin

tags

instruments