By Stuart Condie

SYDNEY--Westpac reported a rise in its unaudited first-quarter profit, supported by what Australia's third-largest bank said was growth in both loans and deposits.

Westpac on Monday posted an unaudited net profit for the December quarter of 1.9 billion Australian dollars, equivalent to about US$1.21 billion. That excluded the impact of notable items related to hedge accounting, which the lender said will reverse over time.

Profit was 3% higher that the average of the prior two quarters, Westpac said. It did not give a year-earlier comparison.

Including those accounting items, underlying net profit was down 9% on the average of the prior two quarters at A$1.7 billion.

Net operating income excluding notable items rose 2% on the average of the prior two quarters to A$5.6 billion, while expenses rose by 1%. Wage growth was offset by seasonally lower investment spending.

Loans were up by 5% on-year, and deposits up by 6%, Westpac said.

Its Australian mortgage portfolio grew by 1% over the quarter to A$508.3 billion, with the average loan size rising 1.9% over the same period to A$325,000.

At the same time, 81% of mortgage balances were overpaid at Dec. 31, from 80% at Sept. 30. A quarter of customers were more than two years ahead on repayments, the bank said.

Mortgage delinquencies fell over the December quarter and customers remained largely resilient despite cost-of-living pressures, Chief Executive Anthony Miller said.

"Encouragingly, inflation has eased and we could see the Reserve Bank of Australia reduce the cash rate as early as tomorrow," Miller said. "This should provide some relief to households and, over time, support business activity."

Net interest margin, a key measure of the profitability of the bank's lending, fell to 1.82% from 2.02% at Sept. 30. Core net interest margin edged down to 1.81% from 1.84% over the same time.

Westpac's CET1 capital ratio of 11.9% at Dec. 31 was above its 11.0%-11.5% target range. It had completed 62% of its previously announced A$3.5 billion on-market share buyback at Feb. 14.

"This has been a solid first quarter performance, reflecting our strong financial position, balance-sheet growth and service excellence," Miller said.

Write to Stuart Condie at stuart.condie@wsj.com

(END) Dow Jones Newswires

February 16, 2025 16:41 ET (21:41 GMT)

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