Westpac Banking (WBC) H1 2025 earnings summary

Executive summary

• Net profit after tax was $3.3bn, down 1% year-over-year, with reported net profit down 9% sequentially due to hedging and operating expenses.

• Return on tangible equity (ex Notable Items) was 11.1%, with a slight year-over-year increase.

• Ordinary dividend maintained at 76c per share, fully franked, with a 75% payout ratio.

• Business and institutional lending grew strongly, up 14% and 15% year-over-year.

• Transformation and digital investments continued, focusing on customer service, innovation, and operational efficiency.

Financial highlights

• Net profit excluding notable items was $3.5bn, down 1% year-over-year; reported net profit was $3.3bn, down 9% sequentially.

• Net interest income rose 2% year-over-year to $9,569m; non-interest income decreased 3% to $1,424m.

• Operating expenses increased 6% year-over-year, mainly due to technology and wage growth.

• Cost-to-income ratio increased by two percentage points to 51.8%.

• Net interest margin was 1.88%, down 1bp year-over-year and 9bps sequentially; core NIM stable at 1.80%.

• Credit impairment charge of $250m, six basis points of average loans, remains below long-run average.

Outlook and guidance

• Australian GDP growth expected to recover to 1.9% in 2025; housing credit growth forecast at ~5%.

• Expense growth expected to rise in the second half due to increased investment, especially in UNITE.

• Credit quality expected to remain resilient, supported by low unemployment and GDP growth.

• Volatility in funding markets and global trade tensions pose risks to funding costs and margin outlook.

• Priorities include customer service excellence, risk management, transformation, and performance improvement.