Westpac Banking Corporation (ASX: WBC) today provided an update on key factors expected to influence its Half Year 2026 financial results, slated for release on May 5, 2026. Westpac, one of Australia’s “big four” banks, offers a comprehensive range of banking and financial services including consumer, business, and institutional banking. The announcement clarified initial impacts from the Middle East conflict and the accounting treatment for the pending sale of the RAMS mortgage portfolio, affirming the bank is well-positioned to support customers amidst ongoing geopolitical uncertainty.
The financial institution anticipates a more challenging economic environment due to expected higher inflation and interest rates stemming from energy market disruption, leading to slower economic growth. Despite these macroeconomic headwinds, Westpac reported solid operating metrics for the half-year. Lending and deposit growth stood at 4% and 3% respectively, while core Net Interest Margin (NIM) remained stable in 2Q26, excluding rate rise timing. Productivity initiatives contributed to a 2% decline in expenses, alongside improved asset quality and a strengthened Common Equity Tier 1 (CET1) capital ratio. However, interest rate volatility reduced Treasury and Markets NIM to 7 basis points in 2Q26 from 15 basis points in 1Q26, and a 6% depreciation in the New Zealand dollar impacted both revenue and costs.
Reflecting the revised economic outlook, Westpac has increased its credit provisions for the half-year, incorporating a new portfolio overlay for energy-intensive sectors. This adjustment is expected to raise the ratio of collective allowance for doubtful debts (CAP) to credit risk-weighted assets (RWA) to approximately 129 basis points, with a credit impairment charge of 10 basis points of average gross loans. Furthermore, the sale of the RAMS mortgage portfolio to a consortium including Pepper Money Limited, KKR, and PIMCO remains on track for completion in the second half of 2026. The 1H26 results will include a Notable Item for RAMS transaction costs, reducing reported net profit after tax by $75 million, following its reclassification to Group Businesses.
