Westpac shares hit new record high on Q1 update

Westpac Banking Corp (ASX: WBC) shares are pushing higher on Friday morning.

At the time of writing, the banking giant's shares are up 2.75% to a new record high of $42.13.

Westpac shares hit record high on quarterly update

Investors have been buying the bank's shares after it delivered a solid first-quarter update that pointed to steady earnings growth, improved credit quality, and a strong capital position.

For the first quarter of FY 2026, revenue increased 1% over the quarterly average in the second half of FY 2025.

This reflects a 2% increase in net interest income, helped by balance sheet growth and a stronger Treasury performance, which offset a 4% decline in non-interest income due to lower markets revenue.

Customer activity remained solid. Lending grew by $22 billion during the quarter, including 7% growth in institutional lending and 3% growth in Australian housing (excluding RAMS) and business lending. Deposits increased by $12 billion, with household deposits up 3% and business transactional deposits up 4%.

Westpac's net interest margin edged down just one basis point to 1.94%. Core margin declined slightly due to competitive pressure in home lending and the lower interest rate environment, but this was partly offset by a stronger Treasury and Markets contribution.

Operating expenses were stable compared to the second half average when excluding prior restructuring charges.

This ultimately led to Westpac reporting an unaudited statutory net profit of $1.9 billion, which is up 5% on the average quarterly profit in the second half of FY 2025. Net profit excluding notable items also came in at $1.9 billion and was up 6%.

The bank's pre-provision profit rose 7%, which reflects a steady operating performance across the business.

Credit and capital

Westpac's asset quality showed further signs of resilience. Impairment charges were low at six basis points of average loans, and stressed exposures declined to 1.17% of total committed exposure.

Westpac's Common Equity Tier 1 (CET1) capital ratio was 12.3%, comfortably above its target operating level of 11.25%. While the ratio fell slightly due to the payment of the FY 2025 dividend, the bank remains well capitalised.

Outlook

Westpac's CEO, Anthony Miller, spoke positively about the bank's outlook. He 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.

The post Westpac shares hit new record high on Q1 update appeared first on The Motley Fool Australia.

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