Westpac Banking Corporation reported a 6% rise in net profit for the first quarter of 2026, underpinned by strong capital ratios and ongoing transformation initiatives. The bank’s strategic focus on customer service and operational efficiency signals a confident outlook amid evolving market conditions.
- Net profit excluding notable items up 6% to $1.9 billion
- CET1 capital ratio at a robust 12.3%, exceeding target
- Growth in deposits and lending across retail and institutional segments
- Progress on transformation programs UNITE, BizEdge, and Westpac One
- Agreement to sell $19.6 billion RAMS mortgage portfolio to streamline operations
Solid Financial Performance
Westpac Banking Corporation kicked off 2026 with a strong first quarter, reporting an unaudited net profit of $1.9 billion, marking a 6% increase compared to the average of the second half of 2025 when excluding notable items. This growth was supported by a 7% rise in pre-provision profit and a 1% increase in net operating income, driven primarily by a 2% lift in net interest income. The bank’s ability to grow its balance sheet and capitalise on favourable Treasury conditions helped offset a 4% decline in non-interest income, largely due to softer Markets revenue.
Capital Strength and Asset Quality
Westpac’s Common Equity Tier 1 (CET1) capital ratio stood at a healthy 12.3%, comfortably above the target ratio of 11.25%. This strong capital position provides a buffer to support ongoing lending and strategic initiatives. Asset quality improved during the quarter, with impairment charges remaining low at 6 basis points of average gross loans and a reduction in stressed exposures to 1.17% of total committed exposures. The bank’s liquidity metrics also remained robust, with liquidity coverage and net stable funding ratios well above regulatory minimums.
Strategic Transformation and Innovation
Westpac continues to advance its transformation agenda, focusing on simplifying operations and enhancing customer experience. The UNITE program has moved from discovery to execution, with a major customer migration to the Panorama wealth management platform scheduled for the first half of 2026. BizEdge, the bank’s faster lending platform, expanded its reach to customers with exposure limits up to $20 million, saving bankers significant time and improving client satisfaction. Meanwhile, Westpac One, a cloud-based digital platform for institutional clients, entered customer trials, promising deeper insights and improved liquidity and payments management.
Customer Focus and Digital Growth
Customer service improvements remain a priority, with increased transaction account sales, particularly via digital channels, and a rising share of new home lending through proprietary channels for the second consecutive quarter. The bank also announced a pilot Community Banking Service for regional customers and extended its regional branch closure moratorium through to 2030, signalling a commitment to regional Australia. Additionally, Westpac has rolled out AI training and Microsoft 365 Copilot access to all employees, the largest such initiative in the Asia Pacific financial sector, aiming to boost workforce capability and innovation.
Portfolio Streamlining and Outlook
In a significant move to streamline mortgage operations, Westpac entered into an agreement to sell its RAMS mortgage portfolio, valued at $19.6 billion as of December 2025. This sale is expected to free capacity for lending in higher-return portfolios, aligning with the bank’s strategic priorities. CEO Anthony Miller expressed optimism about the economic outlook, anticipating resilient demand for both business and household credit. The bank’s strong financial foundations position it well to support stakeholders and navigate future challenges.
Bottom Line?
Westpac’s disciplined execution and capital strength set the stage for sustained growth amid evolving market dynamics.
Questions in the middle?
- How will the RAMS mortgage portfolio sale impact Westpac’s future lending mix and profitability?
- What are the key milestones and risks in the rollout of the UNITE and Westpac One platforms?
- How will competitive pressures and interest rate changes affect Westpac’s net interest margin going forward?