**Westpac Sees Promising Credit Demand in 2025 Despite Annual Profit Drop**

Westpac Banking Corp, Australia's third-largest lender by market value, reported a 3% decrease in annual profits, with net earnings reaching A$6.99 billion ($4.62 billion) for the fiscal year ending September 30. This fall comes amid rising costs and heightened competition within the mortgage market. However, the profit figure surpassed the LSEG estimates, which had projected A$6.50 billion.

Despite the current profit decline, Westpac expressed optimism for 2025, predicting robust demand for both housing and business credit. The bank attributes this positive outlook to anticipated monetary policy shifts by the Reserve Bank of Australia (RBA). According to Westpac, the RBA is expected to adopt an easing stance in 2025, mirroring actions taken by other central banks. "Some central banks have shifted to an easing cycle and the RBA is likely to follow in 2025. This will be good news for many households and businesses," the bank stated.

The RBA has kept interest rates unchanged for almost a year, maintaining the cash rate at 4.35% following a series of hikes totaling 425 basis points since May 2022. This steady rate environment, coupled with competitive pressures, has led to a slight narrowing of Westpac's net interest margin—from 1.95% to 1.93% over the year.

In response to rising interest rates and the associated increase in mortgage repayment costs for borrowers, Australian retail banks, including Westpac, are seeking to broaden their revenue sources beyond traditional home loans. To further support its shareholders amidst these challenges, Westpac declared a higher final dividend of 76 Australian cents per share, up from 72 cents the previous year.