Westpac Banking (ASX:WBC) has released its half-year 2026 results, revealing a resilient financial performance tempered by global volatility and structural shifts.
Despite ongoing geopolitical uncertainty—specifically market disruptions stemming from the Middle East conflict—the bank reported solid balance sheet momentum, with lending and deposit growth rising by 4% and 3%, respectively.
While stable core net interest margins and a 2% reduction in expenses bolstered operating metrics, the bank remains wary of a "supply shock" in energy markets, which it anticipates will drive higher inflation and interest rates.
To mitigate these risks, Westpac has revised its economic outlook, implementing a new portfolio overlay for energy-intensive sectors.
The conservative positioning has led to an expected credit impairment charge of 10 basis points of average gross loans.
Externally, market volatility impacted Treasury NIM, while a 6% depreciation in the New Zealand dollar average exchange rate created further headwinds for revenue and costs.
A primary focal point of the report is the pending sale of the RAMS mortgage portfolio to a consortium including Pepper Money, KKR, and PIMCO.
The divestment remains on track for completion in the second half of 2026.
However, the transaction has already left a mark on the current books; Westpac confirmed that transaction costs related to the sale constitute a "notable item", reducing the reported net profit after tax by $375 million.