Westpac Banking . Stock Earnings Reports

Westpac reported a solid Q1 FY26 operating update with disciplined execution against its five strategic priorities. Key financials: net profit excluding notable items rose 5% versus H2 FY25 average; revenue was up 1% (net interest income +2%, non-interest income -4% driven by markets DVA); operating expenses were broadly stable ex the prior restructuring charge; pre-provision profit increased 6% (2% ex-restructuring). Balance sheet momentum: deposits grew strongly by A$12bn (household +3%, business transactional +4%), loans increased A$22bn across segments (institutional lending +7%, Australian mortgages ex-RAMS +3%). Deposit-to-loan ratio eased to 84% as lending outpaced deposits modestly; management is pre-positioning for an expected A$16bn RAMS mortgage sale by mid-year and has issued A$18bn of long-term wholesale funding since Oct-25. Net interest margin (NIM) was largely stable, down 1bp to 1.94% with core NIM at 1.79% (3bp decline vs H2). Treasury/Markets contributed positively (15bp) but is expected to moderate. Management increased the deposit hedge by A$15bn to A$92bn to provide medium-term earnings stability. Credit quality improved (stressed exposures down 11bps); provisions marginally higher at A$5bn (coverage 125bps); credit impairment charges remain low (6bps). CET1 ended at 12.3%, down modestly after dividend payment; management expects a ~22bp CET1 benefit upon RAMS sale completion. Outlook: optimistic on credit demand and expects continued deposit growth, moderated lending growth in institutional, and that FY26 expense growth will be largely offset by productivity savings.