Finance

Westpac NIM compresses as impairment charges double

The Tip Desk · November 2, 2026 · 3 min read

Net interest income rose 1% to $19.58 billion as 5% average earning-asset growth more than offset a 7bp NIM decline to 1.87%.

Westpac Banking Corporation (WBC) reported net interest income of $19.58 billion for the year to 30 September 2026, up 1% from a year earlier, as 5% growth in average interest-earning assets more than offset a 7 basis point decline in net interest margin. Statutory net profit attributable to owners fell 1% to $6.81 billion; net profit excluding Notable Items was flat at $7.0 billion.

NIM compressed 7bps to 1.87%, with core NIM down 5bps to 1.76% on tighter Australian and New Zealand mortgage and Australian business loan spreads from competition, unfavourable deposit mix and a higher share of savings-bonus customers. Treasury and Markets contribution to NIM fell 2bps to 11bps. Average interest-earning assets rose 5% to $1.05 trillion, led by 14% growth in average business loans to $279.5 billion. Average housing loans rose only 2% after RAMS runoff and sale; average personal loans fell 6%.

Gross loans at 30 September 2026 were $901.3 billion, up 5% year over year. Australian housing excluding RAMS rose 7%, or 1.1 times the APRA housing system, with proprietary lending up to 36% of new lending. Australian business lending rose 15%. RAMS was sold in August 2026. Customer deposits grew 6% to $766.2 billion; Australian term deposits rose 12% and mortgage offsets 12%. The deposit-to-loan ratio rose 59bps to 85.5%. The Group raised $40 billion of new long-term wholesale funding.

Credit impairment charges more than doubled to $864 million, or 10bps of average gross loans versus 5bps in FY25, reflecting a revised economic outlook, new overlays for energy-intensive and discretionary-spending sectors, and higher new IAPs. Collectively assessed provisions to credit RWA rose to 127bps. Stressed exposures as a percentage of TCE declined 11bps to 1.17%.

Non-interest income was up 1% to $3.02 billion as higher fee and net wealth management income more than offset lower Markets revenue. Operating expenses were 1% lower at $11.93 billion statutory; excluding the FY25 restructuring charge they were 1% higher on higher staff costs and a step-up in UNITE investment spend, with the expense-to-income ratio flat at 51.9% excluding that charge. Investment spend was 9.4% of revenue.

The CET1 capital ratio was 12.5%, down 7bps on September 2025, still above the 11.25% target, equating to $2.9 billion above target after the 2026 final dividend. ROE was 9.6%; ROTE excluding Notable Items rose 14bps to 11.1%. Total dividends were 154 cents a share, including a 77-cent final, up 1% on FY25’s 153 cents, with a 77% statutory payout ratio.

Chief Executive Officer Anthony Miller said inflation remains above the Reserve Bank’s target range and interest rates are likely to remain elevated into 2027. Demand for credit remains strong across the Business and Institutional customer base. The bank has announced a target to facilitate $100 billion in housing-related lending by 2030.