Westpac Banking (WBC) H2 2025 earnings summary

Executive summary

• Net profit after tax was $6.9bn, down 1% year-over-year, with adjusted net profit at $7.0bn, down 2%, and revenue up 3% to $22.5bn; expenses rose 9% due to higher investment and staff costs.

• Lending margins are expected to edge lower into 1H26, with ongoing pressure from rate cuts and deposit switching, though some benefit is expected from the replicating portfolio and improved wholesale funding markets.

• Non-interest income rose 10% for the half, driven by higher card fees, business lending fees, and wealth income; trading and other income increased 27% due to higher sales, risk management income, and favorable DVA.

• Investment spend rose 9% year-over-year, with the UNITE project accounting for a significant portion; staff and technology costs increased, offset by productivity savings and a shift in investment mix toward UNITE.

• Credit quality remains sound, with stressed exposures and mortgage arrears declining in both Australia and New Zealand.

Financial highlights

• Net interest margin (NIM) declined slightly to 1.92% for the year, with core NIM down 1bp; non-interest income up 10% for the half; trading and other income up 27%.

• Staff costs increased by AUD 397 million; technology costs up AUD 146 million; productivity savings of AUD 402 million offset some expense growth.

• Total credit provisions down 2% to nearly AUD 5 billion; impairment charges remained low at 5bps of average loans.

• Deposit-to-loan ratio reached an all-time high of just under 85%.

• CET1 capital ratio ended the half at 12.5%, above the new target of >11.25%.

Outlook and guidance

• Lending margins expected to edge lower in 1H26, with deposit spread pressure from rate cuts and product switching.

• Investment spend for FY26 expected at approximately AUD 2 billion, with UNITE accounting for AUD 850–950 million.

• Productivity initiatives are targeted to deliver over $500m in cost savings in FY26.

• Staff costs will rise in FY26 due to banker investments and EBA pay rises; technology expenses remain a headwind.

• Management expects continued loan and deposit growth, with a focus on higher-return segments.