Westpac unable to pass higher funding costs onto customers
(24 August 2018 – Australia) Westpac Banking Corp has downgraded its profit outlook with banking analysts suggesting the challenging political environment has made it tough for the bank to pass elevated funding costs onto customers.
The downgrade came after the bank revealed its core revenue driver – the net interest margin – had contracted to its lowest level since the first half of 2015. This is mainly due to the higher costs of funding from international markets which is adding around $400 million a year to the bank’s cost base.
Westpac said its net interest margin was down 11 basis points to 2.06 percent in the third quarter, well below expectations.
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