Despite the decline in bad debts, Westpac’s numbers suggested its profitability had been squeezed by ongoing competition in the home loan market, where the bank expanded its mortgage portfolio slightly slower than the rest of the market.
Westpac’s net interest margin – which compares funding costs with what it charges for loans – dipped by 2 basis points to 1.92 per cent in the half, and the bank said this was because of tighter spreads on loans and deposits. The bank’s net interest income also decreased by 2 per cent to $9.6 billion.
The bank will pay a dividend of 76¢ a share, which is the same as the dividend in the second half of last year. Miller said the bank was “managing margins actively in a competitive environment,” highlighting 14 per cent growth in its lending to businesses, and 15 per cent growth in lending to institutional clients such as major corporations.
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