The Westpac Banking Corp (ASX: WBC) share price has jumped 6% after the ASX bank share reported strong quarterly growth.
Westpac June 2025 quarter performance
The market has reacted very positively to how the bank performed in the three months to June 2025.
It reported a statutory net profit of $1.9 billion for the quarter, an increase of 14% compared to the quarterly average of the first half of FY25.
In terms of the underlying performance, Westpac reported a net profit of $1.9 billion excluding notable items, representing 8% growth of the FY25 first half quarterly average.
The pre-provision profit rose 6%, with revenue rising 4% and expenses increasing 3%. The costs rose due to wage and salary growth, investment in bankers and planned increase in spending on its UNITE operating model.
Westpac reported that impairment charges were 5 basis points (0.05%) of its average gross loans.
Westpac said it grew strongly in business and institutional banking, while focusing on returns in its consumer division and improving the customer experience. It opened a new branch in Coomera on the Gold Coast and the Darwin business banking centre.
It also revealed it’s piloting AI technology to enhance its real-time scam detection.
Lending profitability
The business noted that its net interest income increased 4%, largely due to the increase in the net interest margin (NIM).
The NIM tells investors how much profit a bank is making on its lending, taking the loan rate minus the costs of funding the loans (such as savings accounts).
Westpac reported its core NIM grew 5 basis points (0.05%) to 1.85%. Around 0.03% of that relates to ‘liquids’, reflecting reductions in liquid and trading assets.
There was a 1 basis point (0.01%) increase related to deposits, thanks to proactive margin management, though there was competition for term deposits.
There was also a 1 basis point (0.01%) increase thanks to loans, with higher ‘spreads’ on mortgage lending in New Zealand, while Australian margins were stable. A mix shift towards higher margin business lending, offset by competition.
Final thoughts on the Westpac share price
Clearly, the market liked what the numbers showed. Profit growth should justify a higher share price over time.
How much further can the Westpac NIM go? I wouldn’t bet a lot on that growth being sustained, unless Westpac continues to focus on profitability, which could reduce its growth rate.
It has already jumped, so I wouldn’t call it a great buy now, but it does still seem cheaper than Comonwealth Bank of Australia (ASX: CBA) considering their respective valuations and growth rates.
But, there are other, smaller ASX dividend shares I’d prefer to buy.
