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Big banks will keep slashing costs and jobs. Westpac shows why
Anthony Miller’s plan for Westpac’s next era is smart. But executing it when Australia faces the broadest economic slowdown in two decades won’t be easy.
All the signs suggest Anthony Miller has the right plan to fix Westpac’s sins of the past and set the country’s second-biggest bank up for its next era.
But that plan is about to collide with the reality of what may become the broadest economic slowdown the Australian economy has experienced in almost two decades, outside the COVID-19 recession that wasn’t.
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Big four bank holds up in weakening economic conditions
Westpac’s (ASX.WBC) fiscal 2026 cash profit of $7 billion was flat on fiscal 2025. Loan growth of 5% and a 1% fall in operating expenses were offset by a 7-basis-point decline in net interest margins and loan impairment expenses doubling from cyclical lows.
Why it matters: Profit missed our forecast by 1%, mainly on NIM. Competition for home loans and deposits absorbed the benefit of higher cash rates, and with fourth-quarter loan applications down around 15% on last year, slowing credit growth likely keeps that competition intense.
The bottom line: We retain our $30 fair value estimate for wide moat Westpac, with shares overvalued, trading at a 25% premium to our valuation.
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Australia news as it happened: Westpac profits total $6.8 billion as further interest rate rise looms; Qantas seeks answers on data breach
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An AI-generated political advertisement released in the lead-up to the Victorian election has been criticised by politicians on both sides of the divide.
The video, which was posted on the Victorian Labor Party’s official social media channels two days ago, features Victorian Opposition Leader Jess Wilson and Victorian One Nation leader Warren Pickering in a Halloween-themed video.
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