AUSTRALIA: Australian lender Westpac on Monday warned of a housing market downturn steeper than any seen in nearly two decades and reported a twofold jump in credit impairment charges, while full-year adjusted profit met market expectations.
Westpac reported net profit excluding notable items of A$6.99 billion (US$4.91 billion) for the year ended September 30, in line with a Visible Alpha consensus estimate and marginally above the A$6.97 billion reported in 2025.
Australia’s third-largest lender by market value forecasts a 10.9 per cent decline in house prices in the year to March 2027, a deeper drop than in any of the four previous housing downturns since 2008.
Credit impairment charges for the year ended September 30 rose 104 per cent to A$864 million. Total provisions for potential loan losses increased 4.2 per cent to A$5.2 billion, reflecting “economic and geopolitical uncertainty”.
Mortgage and investor credit demand has weakened since the government scrapped tax concessions for property investors earlier in the year.
Average monthly mortgage applications in the fourth quarter dropped 15 per cent from a year earlier.
Deposits and loans grew 6.0 per cent and 5.0 per cent, respectively.
Westpac kept its final dividend unchanged at 77 Australian cents per share.
The Australian bank’s core net interest margin, a key measure of profitability, slid 5 basis points (bps) to 1.76 per cent, while its CET1 ratio, a measure of spare cash, slipped 7.0 bps to 12.46 per cent.
Shares of Westpac were up 2.2 per cent at A$37.61 as of 0108 GMT, compared with a 0.4 per cent decline in the broader ASX200 benchmark index.