Westpac Shares Drop as Profit Slips Despite Loan Growth

Shares of Westpac Banking Corp (ASX:WBC) fell 3.2% to A$32.290 on Monday after the Australian banking giant reported a 1% drop in first-half net profit. For the six months ended March 31, net profit came in at A$3.32 billion, down slightly from A$3.34 billion a year earlier. Despite loan growth and higher revenue, rising costs and tighter lending margins weighed on performance.

Total revenue rose 2% year-on-year to A$10.79 billion, supported by a 2% increase in net interest income to A$9.35 billion. However, the bank’s net interest margin narrowed by 3 basis points to 1.80%, reflecting intense competition in the lending market. Operating expenses climbed 6% to A$5.7 billion, driven by wage inflation and ongoing investments in technology.

Loan growth remained a bright spot, with Australian business lending rising 5% and housing loans up 2%. Deposits also increased by 3%. Credit quality improved, with impairment charges falling to A$250 million from A$362 million a year earlier.

Despite these positives, Westpac expressed caution over the global economic outlook, citing trade tensions and tariff uncertainties. The bank raised the probability weighting of its downside scenario for credit losses from 42.5% to 45% to reflect increased risk.

Westpac declared an interim dividend of 76 Australian cents per share, unchanged from the previous half. While its core operations show resilience, pressure from rising costs and margin compression continue to challenge profitability.

Investors reacted negatively to the subdued earnings and cautious outlook, sending Westpac’s stock lower in early trading. The update highlights the ongoing struggles faced by major Australian banks amid evolving economic and competitive pressures.