Westpac shares are surging higher on 14% quarterly profit boost

Westpac Banking Corp (ASX: WBC) shares are leaping higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) bank stock closed yesterday trading for $33.90. In morning trade on Thursday, shares are changing hands for $35.99 apiece, up 6.2%.

For some context, the ASX 200 is up 0.7% at this same time.

This strong performance follows the release of Westpac's third-quarter update for the three months to 30 June (Q3 FY 2025).

Here's what we learned.

Westpac shares rocket on Q3 results

Investors are piling into Westpac shares today after the bank reported unaudited statutory net profit for the quarter of $1.9 billion. That's up 14% from the H1 FY 2025 average.

Management said that notable items, related to economic hedges of term funding, provided a "slight benefit".

Excluding those notable items, net profit increased 8% to $1.9 billion.

Westpac's net interest income was up by 4%, which the bank said was largely due to the increase in net interest margin (NIM). Westpac's core NIM of 1.85% was up 0.05%.

Westpac shares also look to be benefiting with the bank achieving customer deposit growth of $10 billion and gross loan growth of $16 billion. Aussie housing loan growth was 1%, business loan growth was 5%, and institutional loan growth was 2%.

And stronger markets revenue helped drive Q3 non-interest income growth of 6%.

Expenses were up too, increasing 3%, partly due to wage and salary growth.

Pleasingly, Westpac's Common Equity Tier 1 (CET1) capital ratio was 12.3% at the end of the quarter, comfortably above the target operating range of 11.0% to 11.5%.

As at 30 June, the ASX 200 bank had completed 71% of its $3.5 billion on market share buyback.

Westpac reported credit impairment provisions of $5.1 billion as at 30 June. That's $1.9 billion above the bank's base case expected losses.

What did management say?

Commenting on the results lifting Westpac shares today, CEO Anthony Miller said, "We grew strongly in business and institutional banking, while focusing on returns in Consumer and improving customer experience."

Miller added:

The resilience of both households and businesses has been aided by the reduction in interest rates and the moderation of inflation. This is reflected in lower levels of customer stress. It should also underpin a recovery in private sector activity and support lending growth.

Addressing Westpac's technology investments, Miller said, "To further strengthen customer security we are piloting AI technology to enhance real-time scam detection, helping bankers respond quickly to protect customers."

With today's intraday gains factored in, Westpac shares are up 24.8% since this time last year.

The post Westpac shares are surging higher on 14% quarterly profit boost appeared first on The Motley Fool Australia.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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