King,who said Westpac’s balance sheet was the strongest he’d seen in his 29 years at the bank,noted the second half of 2023 presented “a more challenging environment” for Westpac and the broader industry – a trend he expected would continue into 2024.
Westpac posted a net profit of $7.2 billion,up 26 per cent on the previous financial year,and King said the result was built on the back of growth in deposits,mortgages and institutional banking.
The bank announced a final dividend of 72¢ a share,taking its total dividend for the full year to 142¢,up 14 per cent on the previous year,and a $1.5 billion share buyback as credit quality remained resilient and the bank’s capital exceeded regulatory requirements.
While customers have had a “challenging year”,King said hardship levels remained below COVID levels. The bank said it had 13,000 customers in financial hardship.
“Households have been squeezed by cost-of-living pressures and rising interest rates,meaning some have had to adjust their spending to keep up,” he said. “We are not yet seeing significant increases in customers falling behind on repayments.”
Although Westpac’s lending leans towards higher-income borrowers,he said some parts of the market were facing greater challenges.
“Where I think the challenge is popping out of the economy is actually renters,” he said. “If you look at owner-occupiers,they’re going OK,but renters are often people that are lower income. We don’t see it in our loans to investors because of the demand for rental properties at the moment,but I think the rental sector is where the challenge is popping out.”