Westpac profit jumps to $1.9b on home loan strength
The lender said its profits grew as costs fell but revenues largely flat.
Westpac has posted a net profit up 6 per cent to $1.9 billion on revenue that rose 5 per cent to $5.8b for the December quarter, when compared to the average of the prior six-month period.
Australia’s second-largest bank said profits grew faster than revenue partly because it made more home loans itself, rather than through the brokerage channel.
The bank’s operating expenses for the quarter also fell 5 per cent to $3b versus the prior six-month period.
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By continuing you agree to our Terms and Privacy Policy.Chief executive Anthony Miller added that the bank was seeing healthy demand for credit even after the Reserve Bank lifted official interest rates 25 basis points to 3.85 per cent in February.
“We are optimistic on the outlook for the economy and expect demand for both business and household credit to remain resilient,” Mr Miller said.
“Our strong financial foundations provide us with the stability and capacity to support our people, customers, shareholders and the broader economy.”
The bank’s base case is for Australian gross domestic product growth to reach 2.4 per cent in 2026, with residential property prices forecast to climb an average of 6 per cent.
Its shares rose 2.7 per cent in early trade to a record high of $42.13, before giving back their gains to trade flat around lunchtime.
Rival lender ANZ also hit a record high on Friday at $40.95 as its December quarter profit also impressed investors.
Expenses, profit margins flat
Total loans outstanding to borrowers climbed 7 per cent to $879b, versus $825b in the prior corresponding December quarter.
In its Australian home loan portfolio, about 67 per cent of loans are to owner occupiers and 32 per cent to investors. Interest only loans make up 12.2 per cent of its total lending to property buyers.
The average loan size grew from $325,000 in the December 2024 quarter to $350,000 in the December 2025 quarter.
In November the bank entered into an agreement to sell its RAMs-branded mortgage portfolio that has loans outstanding of $19.6b to a consortium including Pepper Money, Kohlberg Kravis Roberts, and PIMCO. The deal is expected to complete later in 2026.
“In addition to contributing to the streamlining of the mortgage operations, the sale provides capacity to lend more across high returning portfolios,” the bank said in its earnings update.
The bank’s total deposits also grew 7 per cent to $735b, versus $688b in the prior corresponding December quarter.
Westpac’s net interest margin - as a measure of what it makes on what it lends, versus what it pays on what it borrows - slipped one basis point to 1.94 per cent.
The bank said its loan book saw minimal bad debts and that total impairment charges equalled just 6 basis points of average gross loans.
“Overall, a solid result,” said Citi’s banking analyst Thomas Strong. “With costs well managed, asset quality benign, and capital strong, we think the result will be well received, albeit we expect little movement to consensus earnings as a result.”
Citi has a neutral rating on ANZ shares and a $39 price target. Over the past five years the stock is now up 83 per cent before including the benefits of dividends.
National Australia Bank will report its first quarter trading update for financial year 2026 on February 18.
