While the bank saw total lending grow by 5% to 901 billion Australian dollars, the cost of funding and a competitive mortgage market took a heavy toll. The net interest margin, a vital indicator of bank health, contracted by 7 basis points to 1.87%. This pressure intensified in the second half of the year, with margins sliding further as the Reserve Bank of Australia continued its campaign to curb inflation through repeated cash rate increases.

Statutory net profit dipped 1% to 6.81 billion Australian dollars, even as revenue eked out a 1% gain. The bank’s bottom line was also impacted by impairment charges, which more than doubled to 864 million Australian dollars. Despite these headwinds, Westpac maintained its final dividend at 0.77 Australian dollars per share. Looking ahead, the lender’s economists project an 11% decline in national house prices during the current cycle, signaling ongoing caution in the residential property sector.