Westpac Banking Corp on Friday said its underlying net profit for the first quarter rose 6% compared with the average of the previous two quarters, driven by healthy growth in both customer deposits and lending.
The country's third-largest lender by market capitalisation reported an unaudited net profit of A$1.9 billion for the three months ended December 31. That result came even as margin pressure persisted in the quarter.
Westpac's core net interest margin - the spread between what the bank earns on loans and what it pays on deposits - fell by 3 basis points to 1.79% for the quarter ended December 31. Management said that the decline in margin had been offset by the expansion of its balance sheet during the period.
During the quarter Westpac added A$12 billion in customer deposits and extended A$22 billion in new loans. In an exchange filing the bank said, "Continued operating momentum drove solid customer deposit and loan growth." Those flows helped to cushion competitive pressure on margins amid a low-rate environment for lenders.
On capital, Westpac reported a common equity tier 1 (CET1) ratio of 12.3% at year-end, a decrease of 23 basis points from the September-end position.
The bank's disclosure included the currency conversion used in reporting: ($1 = 1.4102 Australian dollars).
Clear takeaways from the quarter are straightforward - deposit and loan growth supported headline profit despite a slight compression in net interest margin, while the CET1 ratio moderated modestly from the prior quarter. The figures reported were unaudited for the quarter and reflect the three-month period ended December 31.
Further detail on full-year guidance, expense dynamics or forward-looking capital management was not included in the quarterly figures disclosed.