Westpac Delivers $3.3B Profit, Lifts Dividend on Lending Growth

About Platinum Asset Management

Westpac Banking Corporation (ASX: WBC) is one of the Australia major financial institutions. The company provides various services to consumers, businesses and institutional investors through a diverse portfolio of financial services brands and businesses. Westpac Banking Corporation was listed on the ASX on 18 July 1970 at an issue price of AUD 5.08 per share.

Financial Performance

Westpac posted a statutory net profit of AUD 3.3 billion for 1H25, marginally down 1% from the prior corresponding period. Excluding notable items, profit reached AUD 3.5 billion, which was also broadly flat. The bank declared a 76-cent fully franked interim dividend, reflecting a payout ratio of 75% on an underlying basis.

Net interest income increased marginally, supported by a 3% rise in average interest-earning assets, although net interest margin compressed slightly due to competition and funding cost pressures. Operating expenses rose 3% to AUD 5.7 billion, primarily due to higher wages and investment-related amortisation.

Return on tangible equity (ROTE) excluding notable items came in at 11.1%, while the cost-to-income ratio rose 2 basis points to 51.8%, impacted by elevated strategic spend.

Growth Pipeline

Westpac recorded robust loan and deposit growth in the first half, with net loans increasing by AUD 21 billion to AUD 825 billion and customer deposits rising by AUD 23 billion to AUD 697 billion. Business lending climbed to AUD 105.8 billion, a 14% increase, driven by momentum across sectors such as agriculture, health, and professional services. Institutional lending also expanded strongly to AUD 107 billion, up 15%.

The consumer division remained a source of strength, as mortgage balances grew by AUD 12 billion to AUD 485 billion. Westpac’s focus on proprietary channel performance and the addition of 180 new Home Finance Managers helped streamline home loan origination and increase front-book returns.

In the digital space, customer adoption rose significantly, with around 6.1 million digitally active users and 84% of customers ahead on mortgage repayments by balance, underscoring strong household cash flow management.

Strategic Development

A major contributor to Westpac’s performance remains the UNITE program, its multi-year strategy to consolidate systems, simplify operations, and drive digital transformation. In 1H25, the bank invested $251 million under UNITE, with 77% of that spent expensed during the period. Key achievements included the consolidation of multiple customer identification systems into one, the launch of multi-offset mortgage features, and progress on major platform upgrades like Westpac One and BizEdge.

The rollout of AI and digital tools accelerated during the half, with initiatives like SafeCall, SafeBlock, and automated mortgage assessment tools enhancing customer security and application turnaround times. The bank also decommissioned more than 180 legacy applications and simplified over 700 internal processes. Externally, Westpac reaffirmed its leadership in mobile banking, ranking #1 in The Forrester Digital Experience Review, and introduced new financial inclusion initiatives, such as the first-ever Social Tailored Deposit in Australia and expanded support for women entrepreneurs.

Industry Context

Westpac’s performance was delivered against a challenging backdrop of soft consumer sentiment and global trade volatility. Domestic GDP growth is forecast to rise modestly to 1.9% in 2025, while unemployment is expected to remain steady at 4.5%. The bank’s CET1 capital ratio stood at 12.2%, well above the APRA minimum, enabling continued investment and shareholder returns.

The broader banking sector remains highly competitive, especially in housing credit, where Westpac continues to underwrite at lower rates than peers to defend market share. Regulatory uncertainty, inflationary pressures, and rising stress in sectors like construction and commercial property remain ongoing challenges, but Westpac’s balance sheet strength offers a buffer against emerging challenges.