Westpac CEO Sees Economic Recovery as Mortgage Stress Eases, M&A Activity Rises

Westpac CEO Anthony Miller said Australia’s economy is showing signs of recovery, citing reduced mortgage stress and a surge in corporate buyout interest. Speaking at the Macquarie Australia Conference in Sydney, Miller noted that loans over 90 days overdue had declined, indicating improving financial stability among borrowers.

“There’s a clear reduction in stress levels within the business bank,” said Miller, adding that the current environment points to a turning point in the economic cycle. He emphasized that the pipeline for business lending remains strong, especially with increased demand for mergers and acquisitions financing.

Corporate buyout activity in Australia reached $20.54 billion in Q1 2025, a 13.7% year-over-year decline, according to LSEG data. However, expectations of further interest rate cuts are boosting optimism. Westpac reported that some ongoing M&A deals are “larger than expected,” a sign that confidence is returning to the market.

Australia’s Reserve Bank cut interest rates by 25 basis points in February to 4.1%, its first reduction in four years. Another rate cut is anticipated on May 20, following a drop in core inflation to a three-year low in Q1.

Despite a 1% fall in Westpac’s first-half net profit to A$3.32 billion ($2.14 billion) and a shrinking net interest margin, signs of economic recovery are evident. Mortgage delinquencies dropped significantly, with home loans over 90 days overdue falling to 0.86% by the end of March from 1.12% six months earlier.

The combination of easing mortgage stress, resilient loan performance, and rising M&A appetite suggests Australia’s economy may be on a path to steady recovery, with Westpac positioned to benefit from the shifting landscape.