Westpac has reported a full-year cash profit of $6.8 billion for the year to September, a decline of 1 per cent on the prior year, and warned that Australian home values are likely to drop sharply over the next 12 months.
The bank said it expects national house prices to fall 10.9 per cent from March 2026 to March 2027 and signalled that interest rates will stay higher for longer as it released results to the ASX.
Westpac confirmed it will pay a final dividend of 77 cents a share, taking the total return to shareholders for the year to $1.54 per share, an increase of 1 per cent on the previous year.
The results and forecasts came as the lender described the economy as holding up “relatively well” on the back of stronger business investment, while warning that inflation remains above the Reserve Bank’s target.
"This is presenting challenges for many households and businesses, although impacts are uneven across the economy," the bank said in its ASX announcement.
Westpac also used the results statement to warn that borrowing costs will not fall soon. The bank said it expects interest rates to remain "elevated" into 2027, a view that reinforces market expectations of more tightening.
Higher official interest rates translate into larger mortgage repayments for many borrowers and can damp activity in the housing market, a practical implication Westpac flagged alongside its house price forecast.
The bank pointed to stronger business investment as a support for the economy, but said price growth outside the central bank’s target band continues to influence policy decisions.
Investors and analysts will be watching the Reserve Bank, with the bank’s update arriving ahead of a rate decision that markets expect will be the fifth increase this year.
Westpac’s profit result, dividend settings and outlook for the housing market underline the tensions facing lenders as they balance returns to shareholders with heightened cost pressures for borrowers.
The Reserve Bank will announce its next interest rate decision on Tuesday.
