In a surprising twist, one of Australia’s banking giants has seen its profits dip despite a booming housing market—and the sale of a major loan portfolio has everyone talking. Westpac, the nation’s second-largest mortgage lender, reported a slight decline in net profit after tax, falling 1% to $6.9 billion for the year ending September. But here’s where it gets interesting: the bank also announced the sale of its RAMS home loan business, which holds a staggering $21.4 billion in mortgages, to a high-profile consortium including Pepper Money, KKR, and PIMCO. The sale price? Undisclosed, leaving industry watchers speculating about the deal’s implications.
And this is the part most people miss: While Westpac’s profits may have dipped, the bank’s performance wasn’t all doom and gloom. Its net interest margins—a key metric comparing funding costs to loan charges—rose by 3 basis points in the September half-year, and deposits grew by 7%, with total loans climbing 6%. Business lending, in particular, saw a remarkable 15% jump, fueled by fierce competition to support small and medium enterprises. But here’s the controversial question: Is this growth sustainable, or are banks overextending themselves in a race to dominate the SME market?
Chief Executive Anthony Miller, who took the helm last December, credited the fall in interest rates for a “modest” recovery in demand. However, he acknowledged the Reserve Bank of Australia’s (RBA) delicate balancing act between rising unemployment and inflation. Boldly, Miller stated, “Australia remains well positioned despite global economic uncertainty,” but is this optimism warranted? While many customers have welcomed interest rate relief, small businesses continue to grapple with soaring costs for materials, labor, and energy. What do you think? Is Australia’s economic outlook as rosy as Miller suggests, or are we overlooking potential risks?
Another critical factor in Westpac’s performance was the low bad debt charges, which fell to just 5 basis points of average loans, down from 7 basis points. This improvement reflects easing cost-of-living pressures, but it also raises questions about whether this trend will continue as economic headwinds persist. Meanwhile, Westpac is undergoing a major technology overhaul and cost-cutting initiative to boost returns, with Miller emphasizing this as a long-term priority. But here’s the counterpoint: As banks invest heavily in tech, are they doing enough to address customer needs, or is innovation overshadowing service quality?
With 35,263 full-time equivalent staff—a number largely unchanged from last year—Westpac’s workforce remains stable, but the bank’s focus on efficiency could signal shifts ahead. What’s your take? Are cost-cutting measures a necessary evil, or should banks prioritize customer experience above all else? As Westpac navigates these challenges, one thing is clear: the banking landscape is evolving, and not everyone will agree on the best path forward. Let us know your thoughts in the comments—this conversation is far from over.
