Westpac’s 3Q25 Net Profit Climbs to $1.9 Billion with NIM at 1.99%
Westpac Banking Corporation reported a robust 14% increase in statutory net profit for 3Q25, supported by disciplined growth and resilient credit quality. The bank’s capital and liquidity metrics remain comfortably above regulatory requirements, underscoring its financial strength.
- Statutory net profit rises 14% to $1.9 billion
- Net interest margin improves to 1.99%, driven by better loan and deposit margins
- Credit quality remains resilient with impairment charges down to 5bps
- Common Equity Tier 1 ratio at 12.3%, above target range
- Liquidity coverage ratio and net stable funding ratio well above regulatory minimums
Strong Profit Growth Reflects Disciplined Execution
Westpac Banking Corporation delivered a solid financial performance for the quarter ended 30 June 2025, with statutory net profit climbing 14% to $1.9 billion. Excluding notable items, net profit rose 8%, reflecting steady revenue growth of 4% amid favourable market conditions and disciplined business expansion. The net interest margin (NIM) improved to 1.99%, supported by a reduction in liquid assets and modest enhancements in loan and deposit margins, signalling effective balance sheet management.
Expenses and Investment in Growth
Operating expenses increased by 3%, primarily driven by planned investments in the UNITE program; a strategic initiative aimed at enhancing Westpac’s digital capabilities; alongside wage and salary growth. This measured rise in costs underscores the bank’s commitment to investing in long-term growth while maintaining operational discipline.
Credit Quality Remains Resilient
Credit quality metrics continue to demonstrate resilience, with impairment charges falling to 5 basis points of average gross loans, down 1 basis point from prior periods. Expected credit loss provisions held steady at $5.1 billion, despite an increased weighting to downside economic scenarios. Mortgage delinquencies improved slightly, with 90+ day delinquencies on Australian mortgages declining to 0.59%, reflecting stable borrower repayment behaviour.
Robust Capital and Liquidity Positions
Westpac’s capital position remains strong, with a Common Equity Tier 1 (CET1) ratio of 12.3%, comfortably above the bank’s target operating range of 11.0-11.5%. Risk weighted assets (RWA) decreased by 1.1%, mainly due to lower interest rate risk in the banking book, partially offset by lending growth. Liquidity metrics also remain robust, with a liquidity coverage ratio (LCR) of 134% and a net stable funding ratio (NSFR) of 114%, both well above regulatory minimums, ensuring ample funding stability.
Outlook and Strategic Considerations
Westpac’s deposit to loan ratio held steady at 84%, supported by growth in high-quality deposits. The bank’s cautious approach to credit risk, combined with ongoing investments in technology and customer experience, positions it well to navigate evolving economic conditions. However, the increased weighting to downside scenarios in credit provisioning signals management’s vigilance amid potential macroeconomic uncertainties.
Bottom Line?
Westpac’s 3Q25 results reinforce its position as a financially robust institution, but investors will watch closely for how it manages credit risks in a shifting economic landscape.
Questions in the middle?
- How will Westpac’s UNITE investment impact future expense growth and profitability?
- What are the implications of the increased weighting to downside credit scenarios on future provisions?
- How might evolving economic conditions affect Westpac’s loan growth and deposit stability in coming quarters?