The federal government may mean well on its intention to bolster the competition environment of Australia's banking industry but an overarching federal intervention could backfire on aims to further enhance its economic viability.

This according to Westpac, which declared on its Wednesday yearly general meeting held in Sydney that too much regulation could actually hamper the industry's growth and hurt major players such as his company.

Westpac chair Ted Evans hinted that a hurting bank such as his would not redound well for Australia, which he stressed, is one of the companies responsible in establishing the country's sound financial system and robust economy.

Evans said that Federal Treasurer Wayne Swan should be lauded for introducing his reforms package but warned that more competition should not also mean the possibility of excessive supervision of the banking industry.

The Westpac chair told the bank's shareholders that the government needs to play well its significant role "in ensuring that the banking system remains a sustainable element of Australia's economic infrastructure," which is its existing function at this time.

The bank is expressing alarm that many ideas floated in the ongoing banking debate were actually contradictory to the industry's explicit economic functions.

Nonetheless, Westpac appears far from being distracted as it revealed that new international banking standards and regulations were now being studied in the light of the lingering effects of global economic downturn.

Despite the uncertainty created by the protracted banking debate, Westpac remain upbeat on its credit growth outlook in Australia and New Zealand, which also means that the company is gearing up well for anticipated changes to come in terms of upcoming rules that touches on capital and liquidity.

Evans conceded that tougher measures could be in effect in the future and they would entail the introduction of additional costs for Westpac but he asserted that "we have already made substantial changes to our business and we are well placed to respond and to adapt to regulatory change."