The Westpac Banking Corp (ASX: WBC) share price is under the spotlight after the ASX bank share reported its FY26 first quarter update.
Westpac is one of Australia’s largest banks, with more of a focus on households, while some other banks have a bigger focus on businesses.
Westpac FY26 first quarter update
The ASX bank share reported that compared to the quarterly average from the first half of FY25, net profit rose by 5% to $1.9 billion. Excluding notable items, net profit rose by 6% to $1.9 billion.
Westpac said that this quarter it delivered a “sound” financial result, reflecting the disciplined execution of its strategic priorities.
Financial performance
Westpac reported that revenue increased 1%, with a 2% rise in net interest income (NII) more than offsetting a 4% decline in non-interest income. Interest income makes up a huge part of Westpac’s earnings.
The core net interest margin (NIM) – the lending profitability – fell by 3 basis points (0.03%), reflecting competition and the lower interest rate environment. It was 1 basis point (0.01%) compared to the fourth quarter of FY25.
The 2% increase in net interest income came from lending growth of $22 billion, with 7% growth in institutional lending and 3% growth in both Australian housing and business lending.
Deposit growth was $12 billion, including household deposit growth of 3% and business transactional deposit growth of 4%.
Excluding the restructuring charge in the second half of FY25, operating expenses were stable. Including the restructuring charge operating expenses were 5% lower. It’s pursuing productivity savings of more than $500 million in FY26.
Westpac reported that asset quality improved, impairment charges were “low” at 6 basis points (0.06%) of average gross loans. Pre-profit profit rose by 7% to $2.8 billion.
Non-financial performance
Its focus was on improving customer service through additional bankers, simpler ways of working and more consistent experiences supporting customer advocacy and operating performance.
Westpac noted that it achieved increased account sales, a higher proportion of new home lending through its own/proprietary channel for the second consecutive quarter, and strong growth in institutional lending and a higher proprietary/own lending mix in business.
All employees now have access to AI training and Microsoft 365 Copilot, which was described as the largest roll-out across Asia Pacific.
Management commentary
The Westpac CEO Anthony Miller said:
We are optimistic on the outlook for the economy and expect demand for both business and household credit to remain resilient. Our strong financial foundations provide us with the stability and capacity to support our people, customers, shareholders and the broader economy.
Final thoughts on the Westpac share price
Profit growth is exactly what shareholders want to see, so this is a good update for investors. I’d be happy if I were a shareholder. However, revenue only increased 1%, which isn’t a strong growth rate for the long-term.
Considering so many great businesses have sold-off recently, I think it’d be good to focus on ASX growth shares right now for long-term expansion – a 1% revenue increase isn’t a strong rate of compounding.
