Westpac Banking Corp reported a rise in first-quarter profit as growth in lending and a stronger Treasury and Markets contribution offset weaker markets revenue and modest margin pressure.
The lender posted unaudited net profit excluding notable items of A$1.9 billion for the three months to Dec. 31, an increase of 6% compared with the second-half 2025 quarterly average.
Net interest income increased by 2%, underpinned by expansion in loans and deposits and an improved performance from Treasury. Non-interest income, however, declined by 4%, reflecting reduced markets revenue for the period.
Net interest margin moved slightly lower, slipping 1 basis point to 1.94%. Core net interest margin fell 3 basis points to 1.79%, with the NIM performance partially offset by a stronger contribution from Treasury and Markets.
Shares in the group were volatile around the results. The stock rose as much as 2.8% to a record A$42.13 before trimming gains to trade 1.4% lower at A$40.47 by 01:16 GMT.
On lending, the bank reported an increase of A$22 billion across the quarter. Institutional lending led the expansion with 7% growth, while Australian housing lending excluding RAMS and business lending each recorded 3% growth.
Westpac maintained capital strength through the period. Its common equity tier 1 ratio was 12.3% as at Dec. 31, comfortably above the bank's 11.25% target even after the payment of its full-year dividend.
Chief Executive Anthony Miller said the bank was optimistic about the economic outlook and expected demand for both business and household credit to remain resilient.
Summary
Westpac delivered a modest profit increase in Q1, supported by balance sheet growth and Treasury contributions. Net interest income rose modestly while non-interest income fell due to soft markets activity. Lending expanded by A$22 billion and the CET1 ratio remained above target.
Key points
- Unaudited net profit excluding notable items: A$1.9 billion for the quarter to Dec. 31, up 6% from the second-half 2025 quarterly average.
- Net interest income rose 2% as loans and deposits grew; non-interest income declined 4% on lower markets revenue.
- Lending increased A$22 billion, driven by 7% institutional growth and 3% growth in Australian housing (excluding RAMS) and business lending; CET1 at 12.3% remained above the 11.25% target.
Risks and uncertainties
- Margin pressure: net interest margin slipped 1 basis point and core NIM declined 3 basis points amid competitive pressures and a lower interest rate environment - a factor that affects bank profitability.
- Softer markets revenue: a 4% fall in non-interest income driven by weaker markets revenue could continue to weigh on fee and trading-related income streams.
- Share price volatility: intraday swings around the results illustrate potential market sensitivity to earnings composition and margin moves.