Westpac Reports 6% Profit Rise As Cost Control, Lending Margins Push Shares To Six-Year High

Australia's financial service provider Westpac announced a 6% rise in profits, which has been credited to its stronger lending margins and disciplined cost control that sent its shares to a six-year-high.

Westpac surged ahead of its peers who were still grappling with soaring high interest rates and rising cost-of-living pressures, which led to concerns about asset quality and loan repayment, Reuters reported.

Westpac keeping its total expenses below marketing estimates was a testament to its effective cost management. It managed to keep a rein on its expenses despite greater technology expenditures driving up 2% to A$2.7 billion.

The bank's core net interest margin (NIM) is 1.82%, up 2 basis points from the previous half-year period.

"We think this will be well received by investors, given the positive differentiation versus peer results last week....we think the market will focus on the positive momentum in core NIM and volumes, which should lead to a better revenue outcome vs peers," analysts at Citi said in a note, Reuters reported.

The 6% increase from the previous quarter drove the bank's profit to A$1.8 billion. Westpac Bank's profit outperformed industry averages after recording a 2% rise in profit due to strong growth in customer loans and deposits. Home loans increased by 8% and household deposits by 3%, according to Nasdaq.

Australia's two biggest banks, Commonwealth Bank and National Australia Bank, have recently reported lower profit margins and flagged concerns about loan defaults. Banks are under pressure as homeowners are finding it difficult to repay loans due to high interest rates and growing living expenses, the Nasdaq report stated.