Westpac posts A$1.8 bln Q3 profit, shares drop 5%

Westpac Banking posted a third-quarter net profit of A$1.8 billion, up 3 percent from the first-half quarterly average. The result beat the market’s modest expectations, driven by higher net interest income and tight cost control. On an adjusted basis, net profit rose 2 percent. Pre-provision profit reached A$2.8 billion, up 1 percent versus the first-half average, while total revenue held steady at A$5.7 billion despite a 3 percent drop in non-interest income.

The bank’s numbers reflect a stable lending margin and disciplined spending. Net interest margin stayed flat at 1.89 percent, and operating expenses rose just 1 percent, mainly due to wage growth and targeted investments. Westpac also reaffirmed its plan to deliver more than A$550 million in productivity savings by fiscal 2026. Management noted that strong housing demand and limited supply should cushion the blow from higher interest rates and recent federal policy changes.

Investors weren’t impressed. Westpac shares fell 5.14 percent to A$35.98 in Sydney trading. The bank expects housing credit growth to slow from 6.8 percent in the current fiscal year to 4.7 percent next year, a sign it’s bracing for softer demand.

The result underscores the challenge facing Australia’s big banks: balancing solid margins with rising costs and moderating credit growth. Westpac’s cautious outlook suggests the era of easy profits may be giving way to a more cautious lending environment.