(Reuters) -Australia’s No.3 lender Westpac Banking Corp on Monday reported a quarterly cash profit of A$1.8 billion, benefiting from rising interest rates that caused mortgage payments to rise, even as higher supply costs and expenses weighed.
Interest rates in Australia have been hiked by a cumulative 400 basis points since May last year in the most aggressive tightening campaign in the country’s modern history. Australian banks have passed on these hikes to customers, which helped lift lending margins across the sector.
Westpac reported net interest margin of 2.06% for the quarter, as compared to the 1.96% reported in the first half of 2023.
However, expenses were fuelled by higher inflationary pressures, which were caused by higher supplier costs, wages and salaries. The Sydney-based lender said that expenses for second half 2023 to date rose about 5% compared to the first half.
The bank’s CET1 capital ratio was 11.9% for the June quarter down 42 basis points sequentially, and as compared to the group’s target operating range of 11.0% to 11.5%.
Moreover, the bank said that its mortgages with more than 90 days late rose 0.80% in the three-months ended June for the country.
($1 = 1.5630 Australian dollars)
(Reporting by Riya Sharma and Archishma Iyer; Editing by Mark Porter, Diane Craft and Lisa Shumaker)
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