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Westpac's First-Quarter Net Profit Decline

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Andrew R. Michaud

• February 18, 2024

Westpac Banking Corp Reports Lower First-Quarter Net Profit

Westpac Banking Corp recently announced a decrease in its first-quarter net profit, largely due to notable items impacting its financials. However, the company remains optimistic that these factors will reverse in due time.

Key Financial Details

• Unaudited net profit for the three months ending in December stood at 1.5 billion Australian dollars (US$980 million), marking a 6% decline from the previous six-month average.
• Excluding the notable items related to hedge accounting, the quarterly net profit amounted to A$1.8 billion, aligning with the average of the preceding six months.

Economic Outlook

Westpac anticipates that the economy will exhibit resilience, supported by low unemployment rates and robust corporate sector balance sheets. Chief Executive Peter King highlighted the potential for monetary policy to become less restrictive in the coming year, given the economic slowdown and easing inflationary pressures.

Financial Performance

• Net interest margin for the first quarter was 1.78%, with the core NIM at 1.80%—a 4 basis points decrease compared to the second half of fiscal 2023.
• Despite facing challenges such as lending and deposit headwinds, Westpac managed its NIM effectively during this period.

Industry Landscape

While Australian banks have benefited from rising interest rates, fierce competition in the home loan and customer deposit sectors has exerted pressure on margins, offsetting some of the positive impacts.

Maintaining a strategic outlook amidst market fluctuations and internal challenges will be crucial for Westpac Banking Corp as it navigates the evolving financial landscape.