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Westpac recorded a 3% decline in profits to AU$7 billion for the year ending Sept. 30, as the CEO Peter King announced that the increase in number of borrowers facing financial hardship were driven by customers adapting to soaring interest rates and elevated living costs.

However, King said he was optimistic about the economy showing signs of recovery.

In its financial report released on Monday, the company recorded a 3% decline in profits. The growing competition in the mortgage market was one of the driving factors of the slump, which reflected negatively on Westpac's earnings, according to the Sydney Morning Herald.

The bank's AU$2.2 billion net profit fell 17%, "reflecting intense mortgage competition." Even while it mostly impacted Westpac's business and wealth division, the company's profits improved by 13% to AU$2.4 billion because of more lending to businesses in the fields of professional services, health care, and agriculture.

"We did see hardship arrangements peak in June, and they have come down. So what do I put that down to? I think people have got used to the high level of interest rates and working through cost-of-living [pressures]. We had 47,500 hardship packages during the year, the majority of people required three months to work through their help period," said King

King, the outgoing CEO of Westpac, commended the bank's financial stability and credited its customer-first approach, which has reduced scam losses by 29% and slashed mortgage approval delays in half.

"We've significantly improved our customer service, grown in key segments and delivered another financial result built on a solid balance sheet and capital position," he said, per Nine News.