Boosted by rising interest rates, Westpac posts $4 billion net profit

As borrowers struggle with spiralling repayments, a year of rapid interest rate hikes has helped propel Westpac to a $4 billion net profit in its half-yearly results.

The bank's profit is up 22 per cent compared to this time last year.

Westpac said improving margins, largely due to rising interest rates and growth in home and business loans, had boosted its financial results.

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One year ago, the Reserve Bank began the current tightening cycle, and last week saw the 11th hike since April 2022. The cash rate is now the highest it has been in a decade.

Mortgage repayments have skyrocketed for many households.

"This has been difficult for many customers," chief executive Peter King said in a statement to the ASX today.

"Most mortgage customers are ahead on repayments," he said, while describing mortgage delinquency levels at the bank as "low."

Although interest rates are now "closer to their forecast peak", King warned that the bank expects "to see more stress in the period ahead, particularly in small business".

The economy remains resilient with low unemployment and high population growth, but many analysts expect it to slow over the remainder of 2023.

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King said the bank would enter that environment from a position of strength.

"We've set the balance sheet for the tougher outlook."

Despite high inflation and continued regulatory demands, King said the bank had reduced its cost base over the reporting period.

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