Westpac Banking Corporation has reported a 1% decline in its first-half net profit, totaling A$3.32 billion for the six months ending March 31, 2025. This figure fell short of market expectations, leading to a 3.8% drop in the bank’s share price on the day of the announcement. The profit shortfall was attributed to contracting net interest margins and a rise in operating costs driven by technology investments and the bank’s UNITE simplification program .
Margin Compression and Rising Costs
The bank’s net interest margin (NIM) decreased to 1.88%, down from the previous year, reflecting the impact of intense competition in the mortgage market and a shift towards lower-margin savings accounts. Operating expenses rose by 6%, primarily due to investments in technology and the UNITE program, aimed at simplifying the bank’s operations .
CEO’s Outlook Amid Geopolitical Risks
Chief Executive Anthony Miller highlighted heightened geopolitical risks and weakening business confidence as key concerns, warning that these factors may increase funding costs. He noted that recent instability due to U.S. President Donald Trump’s trade tariffs has impacted global credit markets, potentially leading to higher costs for accessing international and wholesale funding .
Dividend Announcement
Despite the profit decline, Westpac declared an interim dividend of 76 Australian cents per share, up one cent from the prior year. The dividend will be fully franked and is scheduled to be paid on June 27, 2025 .
Political Stability and Economic Outlook
Miller expressed optimism about Australia’s economic outlook following the re-election of the Labor government, citing the continuity and certainty it brings. He emphasized the need to address the country’s long-term productivity slump through a cooperative effort among industries, regulators, and government policy .
Conclusion
Westpac’s first-half results reflect the challenges faced by the banking sector amid global economic uncertainties and competitive pressures. While the bank’s strong capital position and strategic initiatives provide a foundation for future growth, the outlook remains cautious due to geopolitical risks and market volatility.
