UPDATE: Westpac Banking Corp (ASX: WBC) shares have plunged 1.5% to $38.12 in morning trading following the release of its FY 2025 results, which revealed a net profit of $6.9 billion. This decline comes despite an increase in dividends, raising urgent questions among investors.
In a report released just before the market opened, Westpac announced a 3% increase in net interest income to $19.473 billion for the year ending 30 September. This growth reflects a 6% rise in loans, totaling $851.9 billion, including a notable 5% boost in Australian housing loans and a staggering 15% increase in business lending.
However, the bank’s net interest margin (NIM) fell slightly by 1 basis point to 1.94%, attributed to fierce competition in lending and deposits, although it beat the consensus estimate of 1.93%.
Westpac’s operating expenses surged by 9% to $11.916 billion, primarily due to restructuring costs and investments in technology and personnel. This led to a 2.5% year-on-year decline in pre-provision profit, reported at $10.548 billion, slightly below expectations. Despite these challenges, management decided to increase dividends by 1% to 153 cents per share.
“This has been a solid year at Westpac and I’m pleased with the result we are delivering today,” stated CEO Anthony Miller. “Our strong balance sheet and momentum give us the opportunity to deliver more for our customers and shareholders.”
In another significant move, Westpac confirmed it has entered into an agreement to sell its $21.4 billion RAMS mortgage portfolio to a consortium that includes Pepper Money Ltd (ASX: PPM), KKR, and PIMCO. This transaction, while at a slight premium to the portfolio’s gross loan value, is expected to incur a loss after transaction costs.
CEO Miller emphasized that this sale will streamline Westpac’s mortgage operations, reduce costs, and provide strategic flexibility, assuring RAMS customers that their services will remain unchanged.
The market’s reaction raises immediate concerns about investor confidence as Westpac navigates a competitive banking landscape. With the stock falling today, analysts and shareholders alike will be closely monitoring how these financial results will impact the bank’s performance in the coming months.
For those considering investing in Westpac, experts are weighing whether these results signal a buying opportunity or a time to reevaluate positions. The situation remains fluid, and further developments are expected in the wake of this announcement.
