Westpac reports statutory profit of A$6.8 billion as credit impairment charges jump 104%

Key Facts

Westpac said on November 2 that its statutory net profit for fiscal 2026 was A$6.8 billion, down 1% from the previous year, combining steady profit excluding notable items with a sharp rise in impairment charges. Net profit excluding notable items was A$6.992 billion, compared with A$6.972 billion in fiscal 2025, a result the bank described as stable. By contrast, impairment charges rose to A$864 million from A$424 million, an increase of 104%. The bank said credit impairment provisions rose to A$5.2 billion, with collectively assessed provisions increasing to 127 basis points of credit risk-weighted assets. Westpac attributed the creation of new management overlays to economic and geopolitical uncertainty, directing them toward energy-intensive and discretionary-spending sectors.

On revenue, the core net interest margin narrowed to 1.76% in fiscal 2026 from 1.81% a year earlier, while the total net interest margin fell to 1.87% from 1.94%. Reuters data showed deposits grew 6% and loans 5% during the year, while business lending rose 12% and institutional lending 18%. In housing, Westpac’s Australian loans, excluding the RAMS portfolio, grew 7% in the fiscal year, equivalent to 1.1 times housing system growth, according to Australian Prudential Regulation Authority data. The bank said it helped more than 190,000 Australians buy a home during the fiscal year. But it acknowledged that the housing market had slowed as buyers adjusted to higher interest rates and changing policies, adding that this trend was consistent with previous cycles.

Official data point to diverging indicators in Australian housing. Approvals for total dwellings rose 5.1% month-on-month in September to 17,948 units, while approvals for private houses fell 5.3% to 10,432. Meanwhile, the consumer price index rose 4.3% in the 12 months to September, compared with 4.0% through August. Trimmed mean inflation rose to 3.6% from 3.5%, according to the Australian Bureau of Statistics. Westpac said inflation remained above the Reserve Bank of Australia’s target band and that interest rates were likely to stay high through 2027. The target cash rate was 4.60% as of September 30, with the next decision update scheduled for November 3 at 2:30 p.m. Sydney time.

The bank declared a final dividend of 77 Australian cents a share, fully franked with Australian tax credits. Its common equity Tier 1 capital ratio was 12.5%, above the bank’s target of 11.25% under normal operating conditions. WEBNF shares closed at $27.35 on October 29, according to EL7 data. These figures put the bank’s performance in the context of a market where mortgage demand is slowing: Reuters reported that average monthly mortgage applications fell 15% in the fourth quarter compared with the same period a year earlier. At the same time, Westpac’s annual housing loan growth remained positive, reflecting a divergence between the bank’s portfolio performance and more recent demand indicators.

In its outlook for the next fiscal year, Chief Executive Anthony Miller said the bank expected house prices to fall 11% peak-to-trough before recovering in the second half of 2027. He also forecast housing credit growth would slow to below 4% in fiscal 2027. The forecasts align with Westpac’s warning that interest rates would remain high through 2027, as buyers face higher borrowing costs. The Reserve Bank of Australia’s decision update is due on November 3, the next officially scheduled review of the interest rate. The bank’s statement did not include a specific forecast for the outcome of that meeting.