Westpac Banking (WBC) H2 2025 earnings summary

Executive summary

• 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.

• Net profit excluding notable items was $7.0bn, down 2% year-over-year; statutory net profit was $6.9bn, down 1%.

• Revenue increased 3% to $22.5bn, while expenses rose 9% to $11.9bn, driven by higher investment and staff costs.

• Deposit growth was strong at 7% to $723bn, and loan growth was 6% to $856bn.

• Non-interest income rose 10% for the half, driven by higher card fees, business lending fees, and wealth income.

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; fee income up 5%; trading and other income up 27%.

• Staff costs increased by AUD 397 million; technology costs up AUD 146 million; volume and other expenses up AUD 199 million.

• Productivity savings of AUD 402 million offset some expense growth.

• CET1 capital ratio ended 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.