Australian lender Westpac expects strong loan demand in 2025 and reports annual profit to fall 3%

AUSTRALIAN bank Westpac Banking on Monday (November 4) reported a fall in annual profits and said it expects strong demand for housing and business loans in 2025 as the country’s central bank looks to move toward policy easing.

“Some central banks have moved into an easing cycle and the RBA (Reserve Bank of Australia) is likely to follow suit in 2025. This will be good news for many households and businesses,” the bank said.

It also increased its buyback program by A$1 billion (S$871 million).

The RBA has kept interest rates steady for almost a year after raising the interest rate by 425 basis points to 4.35 percent from May 2022.

Westpac, Australia’s third-largest lender by market value, reported a 3 percent fall in profit for the year ended Sept. 30 to A$7 billion due to rising costs and intense competition in the mortgage market. However, this beat LSEG’s estimate of A$6.5 billion.

The bank’s net interest margin, a key measure of profitability, fell to 1.93 percent from 1.95 percent in the previous year, reflecting competition in mortgage prices.

Rising interest rates, which increase borrowers’ mortgage repayment costs and increase competition, are pushing Australian retail banks to diversify their revenue streams beyond their traditional focus on mortgages.

Westpac announced a higher final dividend of 76 Australian cents per share, up from 72 Australian cents a year earlier. REUTERS