Westpac Banking Corporation has disclosed that transaction costs related to the pending sale of its RAMS mortgage portfolio will reduce reported net profit after tax by $75 million in the first half of 2026. The sale to a consortium including Pepper Money Limited, KKR, and PIMCO remains on track for completion in the second half of 2026, representing a significant strategic shift in the bank’s business composition and capital allocation strategy.
Beyond the RAMS transaction, Westpac has provided investors with early clarity on how geopolitical uncertainty and energy market disruptions are shaping its financial outlook. The bank expects the supply shock from Middle East conflict to drive higher inflation and interest rates, which will likely slow economic growth and create a more challenging environment for some customers. In response, management has added a new portfolio overlay for energy intensive sectors and revised its base case provision scenario accordingly, resulting in a credit impairment charge of 10 basis points of average gross loans.
Despite these headwinds, Westpac demonstrated solid operational momentum through the first half. The bank achieved lending and deposit growth of 4 percent and 3 percent respectively, while maintaining stable core net interest margin excluding rate timing impacts. Productivity initiatives drove a 2 percent decline in expenses, and asset quality metrics improved alongside a strengthening core equity tier one capital ratio. These results suggest the bank is managing its cost base effectively while building financial resilience.
The geopolitical environment did create specific revenue pressures. Interest rate volatility impacted Treasury and Markets net interest margin, which fell to 7 basis points in the second quarter from 15 basis points in the first quarter. Additionally, the 6 percent depreciation in the New Zealand dollar average exchange rate affected both revenue and costs through foreign currency translation, reflecting the bank’s exposure to regional economic conditions.
From a capital perspective, the increased credit provisions are expected to lift the ratio of capital adequacy to credit risk weighted assets to approximately 129 basis points. This metric indicates management’s confidence that Westpac maintains sufficient capital buffers to absorb potential credit losses while continuing to support customers through an uncertain period. The restated segments for the prior year periods, which moved RAMS from the Consumer segment to Group Businesses, do not change the Group’s overall net profit or line item composition, making comparisons clearer for investors.
Investors should mark 5 May 2026 on their calendars for the full half year results announcement, which will provide comprehensive detail on how these items and broader economic trends have impacted overall profitability and the bank’s strategic position. The RAMS transaction completion in the second half will be a key milestone to monitor, as it represents a meaningful shift in the bank’s balance sheet and may generate further notable items. This announcement is price sensitive and flagged as material by the ASX.
View the full ASX announcement (PDF)
About Westpac Banking Corporation (ASX: WBC)
Westpac Banking Corporation is one of Australia’s oldest and largest banks, providing consumer, business, and institutional banking services. It operates across Australia, New Zealand, and the Pacific region.
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