Westpac (ASX: WBC) Q1 Profit Rises 6% as Lending Growth and Treasury Income Strengthen Earnings

Westpac Banking Corp (ASX: WBC) reported a 6% increase in first-quarter profit, driven by solid balance sheet growth and stronger treasury income that helped offset softer markets revenue and ongoing margin pressure. The Australian banking giant posted an unaudited net profit of A$1.9 billion for the three months ended December 31, excluding notable items. The result marks a 6% rise compared to the second-half 2025 quarterly average, highlighting resilience in a competitive lending environment.

Net interest income rose 2%, supported by continued loan and deposit growth as well as improved treasury performance. However, non-interest income declined 4% due to weaker markets revenue. Westpac’s net interest margin (NIM) slipped by 1 basis point to 1.94%, reflecting competitive pressures across the Australian banking sector and the impact of a lower interest rate environment. Core NIM fell 3 basis points to 1.79%, though this was partially offset by stronger contributions from Treasury and Markets operations.

Total lending increased by A$22 billion during the quarter. Institutional lending grew 7%, while Australian housing lending, excluding RAMS, and business lending each rose 3%. The growth in credit demand underscores improving business confidence and steady household borrowing trends.

Westpac’s common equity tier 1 (CET1) ratio stood at 12.3% as of December 31, comfortably above its 11.25% target, even after paying its full-year dividend. The strong capital position provides flexibility for future growth and shareholder returns.

Following the earnings announcement, Westpac shares initially surged 2.8% to a record A$42.13 before reversing course to trade 1.4% lower at A$40.47. CEO Anthony Miller expressed optimism about Australia’s economic outlook, stating that demand for business and household credit is expected to remain resilient in the coming quarters.