Feb 13 (Reuters) – Westpac Banking Corp reported a 6% rise in its first-quarter underlying profit on Friday, driven by solid growth across customer deposits and loans, and forecast credit demand to remain resilient in a robust economy.
Australia’s third-largest bank by market value posted unaudited net profit of A$1.9 billion ($1.35 billion) for the three months ended December 31, 6% higher than the average of the prior two quarters.
That was largely underpinned by healthy growth in its deposits and loan book. Westpac added A$12 billion in customer deposits and A$22 billion in new loans during the quarter, helping cushion competitive pressure on margins.
“We are optimistic on the outlook for the economy and expect demand for both business and household credit to remain resilient,” CEO Anthony Miller said.
Earlier in the week, larger rival Commonwealth Bank of Australia reported market share gains in home loans, business loans and deposits, which helped it post a record first-half performance.
However, intense competition between lenders to attract borrowers in a low-interest-rate environment has been pressuring their net interest margins, a key profitability metric measuring the spread between loan yields and deposit costs.
For the quarter ended December 31, Westpac’s core net interest margin slipped 3 basis points to 1.79%.
Credit quality remained strong during the quarter. Fewer borrowers in Australia fell behind on their repayments, with mortgages overdue by more than 90 days dropping to 0.58% from 1.03% a year ago.
The share of loans showing signs of stress also eased to 1.17% of total lending, the lowest since June 2023.
Westpac’s common equity tier 1 (CET1) ratio, a key measure of spare cash, stood at 12.3% at year-end, down 23 basis points from September-end.
($1 = 1.4102 Australian dollars)
(Reporting by Sameer Manekar and Sneha Kumar in Bengaluru; Editing by Krishna Chandra Eluri)
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