Westpac Profit Slips 1% to $6.8B as RBA Lifts Rates

Westpac profit fell 1% to $6.8 billion in the 2026 financial year. The news landed one day before another interest rate rise. Australia’s second-biggest bank still called the result “solid”. However, the numbers show a bank under pressure from thin margins, rising bad-loan costs and a cooling housing market. Here, we explain what happened, why Westpac is cutting costs and what the RBA rate hike means for borrowers.

Westpac Profit Falls 1% to $6.8 Billion in FY26

Westpac reported a statutory net profit of $6.8 billion for the year to September 30, 2026. That is down 1% on the year before, according to the bank’s FY26 media release from November 2. Net profit before one-off “notable items” was flat at $7.0 billion.

The bank also lifted its payout. It declared a 77-cent final dividend, fully franked. That takes the full-year dividend to 154 cents per share, up 1%. Its CET1 capital ratio stood at 12.5%, well above the bank’s 11.25% target. In plain terms, that ratio shows how much cushion the bank holds against losses.

Investors took the news calmly. Westpac (WBC.AX) shares closed 1.0% higher on Monday, while the ASX 200 fell 0.6%, ABC News reported.

What Sits Behind the Westpac Profit Result

The headline looks steady. Underneath, the story is more mixed. Some parts of the business grew well. Others slowed or cost more.

Lending and Deposits Grew, but Margins Slipped

Customer deposits rose 6% and lending rose 5%. Business lending jumped 12% and institutional lending climbed 18%, per the Westpac Wire. Pre-provision profit, which is profit before bad-loan costs, rose 4% to $10.9 billion.

Margins told a weaker story. Core net interest margin measures what a bank earns on loans. It slid 5 basis points to 1.76%, Reuters reported. UBS analyst John Storey said tougher competition for deposits and loans caused the squeeze. He expects it to carry into FY27, ABC News noted. Meanwhile, JP Morgan’s Andrew Triggs called the core margin “very weak” in the fourth quarter.

Bad-Loan Charges More Than Doubled

Credit impairment charges rose 104% to $864 million. Westpac said higher rates, elevated fuel prices and global tension are putting some stress on its loan book. Total provisions for loan losses grew 4.2% to $5.2 billion, according to Reuters. Even so, the bank said its credit quality remained resilient.

Cost Cuts and Job Cuts: How Westpac Protects Its Profit

Westpac is squeezing costs to defend earnings. Expenses fell 1% over the year, and its cost-to-income ratio improved by 116 basis points. The bank aims to beat the peer average on that measure by FY29, its ASX announcement states.

People are part of that plan. Last month, Westpac said it would cut about 250 jobs through voluntary and unplanned redundancies, AAP reported. At the same time, 95% of staff now use AI tools, CEO Anthony Miller said.

Behind this sits UNITE, a multi-year program to simplify the bank’s technology. Investment spend hit 9.4% of revenue this year. That is a big bill. As UBS warned, project execution risk rises just as revenue gets harder to find.

The AFR’s Chanticleer column made a similar point. It argued that big banks will keep cutting costs and jobs. Westpac’s plan looks smart, the column said. But it may collide with the broadest economic slowdown in almost two decades, outside the COVID-19 recession. Other lenders face the same squeeze. We saw a similar cost push in our report on UBS job cuts as Q3 profit hit $2.7 billion.

RBA Rate Hike Lifts the Cash Rate to 4.85%

The next shoe dropped on Tuesday. The Reserve Bank board raised the cash rate by 0.25 points to 4.85%, the RBA said. It is the fifth RBA rate hike this year. It is also the highest cash rate since late 2008, per ABC News. The change takes effect on November 4.

The vote was not unanimous. Six board members backed the rise, and three wanted to hold. The RBA also pushed back its inflation outlook. It now expects inflation to stay elevated through much of 2027. It does not see inflation reaching the top of its 2–3% target range until late 2027.

ABC says the RBA has left the door open to more hikes. The next decision is due on December 8. Westpac’s own message matches this view. Miller said interest rates are likely to remain elevated into 2027. For background, see our reports on the RBA lift to 4.6% and the fuel price shock behind rising inflation.

What the Westpac Profit Means for Borrowers and Housing

For borrowers, the message is simple: costs stay high for longer. As an example, we ran the numbers on a $600,000 loan over 25 years. A 0.25-point rise adds about $92 a month to repayments. That is our own estimate, and your lender’s figures may differ.

The housing market is also softening. Westpac now forecasts house prices to fall 10.9% in the year to March 2027, per Reuters. Mortgage applications dropped 15% in the September quarter from a year earlier. They stayed above the five-year average, though. Separately, Cotality data shows national home prices fell 1.2% in October.

Miller said first-home buyers are waiting. “Unless they absolutely have to buy then those people are going to wait,” he told Reuters. If you are buying soon, check our guide on how rate rises cut first-home buyers’ borrowing power. We also covered earlier warning signs in Westpac’s fall as mortgage applications dropped 10%.

The wider economy looks weaker too. CBA now sees growth of just 1% by mid-2027 and unemployment at 5.1%. NAB expects growth of 1.0% in 2027 and unemployment reaching 5.4% by the end of 2027, ABC News reported.

What Comes Next for Bank Shares

Westpac is only the first big bank to report this week. National Australia Bank (NAB.AX) reports on Thursday, and ANZ Group (ANZ.AX) follows on Monday, November 9. Commonwealth Bank (CBA.AX) reported an $11 billion full-year profit back in August.

So what should we watch? First, net interest margins, because competition keeps squeezing them. Second, bad-loan charges, which can jump when rates rise. Third, how fast each bank cuts costs. The Westpac profit result shows that cost control can hold earnings steady, but it cannot fix every pressure. Analyst views differ, and no one can promise where shares go next.

FAQs

How much was the Westpac profit for FY26?

Westpac reported a statutory net profit of $6.8 billion for the year to September 30, 2026. That is down 1%. Profit before one-off items was flat at $7.0 billion.

Why did the Westpac profit fall?

Bad-loan charges more than doubled to $864 million, and margins narrowed because of tougher competition. Cost cuts and growth in business lending offset part of that hit.

How many jobs is Westpac cutting?

Westpac said last month it would cut about 250 jobs through voluntary and unplanned redundancies, AAP reported. The bank is also running a multi-year technology program called UNITE to lower costs.

What did the RBA rate hike do to the cash rate?

The RBA raised the cash rate by 0.25 points to 4.85% on November 3. It is the fifth rise this year and the highest level since late 2008. The change starts on November 4.

What does the Westpac profit mean for mortgage holders?

Westpac expects rates to stay elevated into 2027. Borrowers should check their budgets, compare loan rates and talk to their lender early if repayments feel tight.

Did Westpac pay a dividend?

Yes. It declared a 77-cent fully franked final dividend. The total for FY26 is 154 cents per share, up 1%.

Explore Smarter Market Research With Meyka

Bank results and rate decisions can move shares fast, so good research matters. Meyka is an AI-powered stock research and alternative-data platform. It helps you track stocks, news and market trends in one place. If you are interested in the stock market, check out Meyka and see how it can support your research.

Disclaimer: This article is for informational purposes only and is not financial advice. Always do your own research or consult a licensed financial advisor before making investment decisions.