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Westpac has reported a dip in annual profits despite growth across business and home lending, partly blaming competitive pressures and a tough economic backdrop.
In its result for the financial year ending September 2025, the major grew lending 6 per cent to $851.9 billion, bolstered by a 14 per cent rise in Australian business lending (to $221.8 billion).
The increase failed to lift net profits, which fell 2 per cent to $6.97 billion.
Westpac’s home lending increased by 3 per cent, to $525.4 billion, which was below system. The lender said this was partly due to the decision to close RAMS to new business.
Excluding this impact, mortgages grew 5 per cent to $497.0 billion, representing 0.8 times APRA housing system growth.
Almost all new flow was in variable-rate mortgages, with the mix of investor loans increasing throughout the year as part of a targeted strategy.
The results also showed that Australian personal lending was down 4 per cent to $9.0 billion, reflecting subdued new lending, while total loans inched up 3 per cent to $525.4 billion.
Customer deposits grew by 7 per cent to $723.0 billion, supported by growth in household deposits and an increase in business transactions.
RAMS housing loans plummeted 28 per cent to $21.6 billion as the brand was in runoff. The bank is selling the RAMS mortgage portfolio to a consortium, including Pepper Money and global investment firm KKR.
The big four bank holds a 21 per cent share of Australia’s household deposits market, 21 per cent of the country’s mortgage market, and 16 per cent of the business lending market.
Westpac CEO Anthony Miller commented: “With a very strong balance sheet and momentum in our target segments, the opportunity to deliver more for our customers, people and shareholders is exciting.
“We’re focused on relentless execution of our strategy and delivering every day for our customers. We’ve managed margins in a competitive environment and our capital position is strong, providing us with plenty of flexibility as we execute our strategy.”
Westpac joins proprietary lending push
In its full-year results, Westpac also outlined plans to grow proprietary lending and said it was “targeting higher returning” segments and channels.
Despite that, Westpac reported that the share of mortgages written by its proprietary channel had fallen for the year.
The proprietary channel originated less than a third of new home loan flows (32.6 per cent).
Overall, the proportion of all Australian mortgages on the major bank’s books from the proprietary channel dropped to 45.1 per cent from the proprietary channel at year end, down from 48.2 per cent the year before.
[Related: Westpac sells RAMS portfolio to Pepper consortium]
