Banking major facing tighter deposit spreads
Westpac’s first-half results prove that competition is heating up in the Australian mortgage market following the Reserve Bank of Australia’s February interest rate cut.
While home loan deposit grew by 2%, mainly due to growth in the owner-occupier segment, net interest margins (NIMs) at the Big Four bank fell three percentage points sequentially to 1.8%.
NAB attributed these tighter margins to narrower deposit spreads and a shift towards lower-margin savings accounts. Home loan competition “remains elevated”, said the bank.
Yet credit quality remains in good form, with a notable decrease in 90+ day mortgage delinquencies.
Business lending outperformed the home loan space with 5% worth of growth. Westpac highlighted particularly strong growth in agriculture, health and professional services.
Across the whole business, net profit after tax was down 1% year on year to $3.3 billion, while return on tangible equity was up nine basis points to 11.1%.
“This result confirms Westpac’s strong position,” said chief executive Anthony Miller (pictured). “We are growing in the areas we’re targeting and supporting customers through uncertain times. I’m pleased with the way our people have galvanised around our priorities.”
Miller said the first-half results “demonstrates our achievements and ensures we are ready for the challenges ahead”.
