Westpac Posts $3.5bn Profit, Accelerates Digital and Sustainability Initiatives

Financial Performance and Capital Strength

Westpac Banking Corporation released its interim results for the six months ending 31 March 2025, reporting a net profit of $3.5 billion excluding notable items, representing a modest 1% decline from the same period last year. The bank’s return on tangible equity (ROTE) stood at 11.1%, slightly down by 9 basis points, while the cost-to-income ratio increased by 2 percentage points to 51.8%, reflecting ongoing investments and wage growth.

Capital adequacy remains a highlight, with the Common Equity Tier 1 (CET1) capital ratio at a robust 12.2%, comfortably above the top end of Westpac’s operating target range. This strong capital position provides a buffer against economic uncertainties and regulatory changes, including the upcoming phase-out of Additional Tier 1 (AT1) capital instruments mandated by APRA.

Growth in Lending and Deposits

Westpac demonstrated momentum in business lending, with a 14% increase in business loans to $105.8 billion and a 15% rise in Westpac Institutional Bank (WIB) lending to $107 billion. Household deposits grew by 9%, underpinning a customer deposit to loan ratio of 84.5%, indicative of a stable funding base. Mortgage lending showed resilience despite competitive pressures, supported by the addition of 180 Home Finance Managers and mortgage product simplification under the UNITE program.

Digital Transformation and Customer Experience

The bank continues to invest heavily in its UNITE program, allocating $251 million in 1H25 towards technology and process simplification aimed at delivering a consistent and streamlined customer experience. Initiatives such as the consolidation of identity verification processes, introduction of multiple mortgage offset accounts, and the rollout of AI-powered mortgage assessment tools underscore Westpac’s commitment to digital innovation.

Customer service metrics reflect progress, with Westpac’s mobile banking app ranked #1 in Australia and the bank achieving improvements in Net Promoter Scores (NPS) across consumer and business segments. The introduction of features like SafeCall, SafeBlock, and enhanced fraud detection tools have contributed to a 19% reduction in customer scam losses compared to the previous half.

Sustainability and Social Responsibility

Westpac’s sustainability agenda remains a strategic priority, with $33 billion in sustainable finance lending as of March 2025 and an 88% reduction in scope 1 and 2 emissions from 2021 levels. The bank has doubled its commitment to female entrepreneurs, supporting $1 billion in funding to over 1,000 business owners. Additionally, Westpac launched Australia’s first Social Tailored Deposit product to address specific social issues through targeted lending.

Governance enhancements include elevating the Chief Sustainability Officer role to report directly to the CEO and integrating sustainability metrics into executive scorecards. The bank also continues to advance diversity and inclusion, with women representing 49% of senior leadership and ongoing initiatives to support Indigenous employment and mental health.

Credit Quality and Risk Management

Credit quality remains stable with impairment charges low at 6 basis points of average loans, though provisions were $1.7 billion above the base case reflecting cautious economic outlooks. Stressed exposures have decreased slightly, supported by strong underwriting standards and portfolio diversification. Westpac’s commercial property exposure is weighted towards premium assets with conservative loan-to-value ratios.

Regulatory compliance and risk management continue to be focal points, with the bank preparing for APRA’s new capital standards and the Reserve Bank of New Zealand’s capital review. Westpac’s liquidity coverage ratio (LCR) averaged 135% in the quarter, well above regulatory minimums, supported by a diversified funding mix and increased stable deposits.