Q3 2026 Westpac Banking Corp Earnings Call

August 9, 2026

Speaker #2: Good morning, and welcome to Westpac's third quarter FY26 update. I'm Justin McCarthy, General Manager of Investor Relations. Joining me today is Nathan Goonan, our CFO.

Justin McCarthy: Good morning, welcome to Westpac's Q3 FY26 update. I'm Justin McCarthy, General Manager, Investor Relations. Joining me today is Nathan Goonan, Chief Financial Officer. Before we commence, I acknowledge the traditional custodians of the land in which we meet. For us in Barangaroo, that's the Gadigal people of the Eora Nation. I pay my respects to elders, past and present, and extend that respect to all Aboriginal and Torres Strait Islander people. Nathan will provide a brief overview of our quarterly performance and then take questions. In the interest of time, we'll take one question per person. Nathan?

Justin McCarthy: Good morning, welcome to Westpac's Q3 FY 2026 Update. I'm Justin McCarthy, General Manager, Investor Relations. Joining me today is Nathan Goonan, our CFO. Before we commence, I acknowledge the traditional custodians of the land in which we meet. For us in Barangaroo, that's the Gadigal people of the Eora Nation. I pay my respects to elders, past and present, and extend that respect to all Aboriginal and Torres Strait Islander people. Nathan will provide a brief overview of our quarterly performance and then take questions. In the interest of time, we'll take one question per person. Nathan?

Speaker #2: Before we commence, I acknowledge the traditional custodians of the land on which we meet. For us in Barangaroo, that's the Gadigal people of the Eora Nation.

Speaker #2: I pay my respects to Elders past and present, and extend that respect to all Aboriginal and Torres Strait Islander people. Nathan will provide a brief overview of our quarterly performance and then take questions.

Speaker #2: In the interest of time, we'll take one question per person. Nathan.

Speaker #3: Thanks, Justin, and good morning, everyone. The third quarter reflected continued operational and balance sheet momentum, underpinned by disciplined execution of our strategy. While the external environment remains uncertain, we are well positioned.

Nathan Goonan: Thanks, Justin. Good morning, everyone. The Q3 reflected continued operational and balance sheet momentum underpinned by disciplined execution of our strategy. While the external environment remains uncertain, we are well-positioned with a strong balance sheet, disciplined risk settings, and a clear strategic agenda. That agenda is centered on improving service and deepening customer relationships with an emphasis on the proprietary channel in both consumer and business. We are focused on simplifying our business and increasing productivity. UNITE is progressing well, and we are implementing a revised operating model, Catalyst, to further improve our execution. Net profit, excluding notable items, increased 2% compared to the H1 FY26 average. Revenue was up 1% with growth of between 2% and 4% in our Australian divisions. This was partially offset by a 7% decline in New Zealand or 3% in constant currency terms.

Speaker #3: With a strong balance sheet, disciplined risk settings, and a clear strategic agenda, that agenda is centered on improving service and deepening customer relationships, with an emphasis on the proprietary channel in both consumer and business.

Speaker #3: We are focused on simplifying our business and increasing productivity. Unite is progressing well, and we are implementing a revised operating model catalyst to further improve our execution.

Speaker #3: Net profit, excluding notable items, increased 2% compared to the first half 2026 average. Revenue was up 1%, with growth of between 2% and 4% in our Australian divisions.

Speaker #3: This was partially offset by a 7% decline in New Zealand, or 3% in constant currency terms. Net interest income increased 2%, which more than offset a 3% decline in non-interest income due to timing and one-off items.

Nathan Goonan: Net interest income increased 2%, which more than offset a 3% decline in non-interest income due to timing and one-off items. Volatile items related to geopolitical uncertainty and the associated increase in market volatility were only a slight drag following an AUD 271 million reduction in the H1. Operating expenses were up 1%. These revenue and expense outcomes resulted in pre-provision profit growth of 1%. Sustainably growing customer deposits underpins our ambition to improve returns. The growth of 2% in the quarter highlights this priority. Consistent with seasonal patterns, transaction balances grew strongly. Business and Wealth and Institutional increased by 4% and 10% respectively, while household transaction balances were stable. The notable mix shift in the deposit portfolio was a slowing in consumer saving balances and an increase in term deposits with advertised term deposit rates above the saving rates for the first time since December 2023.

Speaker #3: Volatile items related to geopolitical uncertainty and the associated increase in market volatility were only a slight drag, following a $271 million reduction in the first half.

Speaker #3: Operating expenses were up 1%. These revenue and expense outcomes resulted in pre-provision profit growth of 1%. Sustainably growing customer deposits underpins our ambition to improve returns.

Speaker #3: The growth of 2% in the quarter highlights this priority. Consistent with seasonal patterns, transaction balances grew strongly. Business and Wealth and Institutional increased by 4% and 10%, respectively.

Speaker #3: While household transaction balances were stable, the notable mix shift in the deposit portfolio was a slowing in consumer saving balances and an increase in term deposits, with advertised term deposit rates above the saving rates for the first time since December 2023.

Speaker #3: We expect system deposit growth to remain solid during the fourth quarter, supported by a seasonal increase in household balances and a likely reduction in institutional deposits.

Nathan Goonan: We expect system deposit growth to remain solid during the Q4, supported by a seasonal increase in household balances and a likely reduction in institutional deposits. Loans increased 2% with growth across all customer segments. Australian mortgages, excluding RAMS, grew by 2%, slightly above system. The proportion of proprietary flow rose to 36%, reflecting progress in executing our mortgage strategy. We expect mortgage system growth to moderate in the Q4 in response to a higher rate environment and the recent federal government policy changes. In the near term, our growth is likely to be below system, given our initial cautious response to heightened competition. Compared with the Q2, mortgage applications declined 11% in the Q3 and have declined 20% since the budget. Based on our analysis of credit checks, system-wide applications have fallen by slightly less than these amounts.

Speaker #3: Loans increased 2%, with growth across all customer segments. Australian mortgages, excluding RAMS, grew by 2%, slightly above system. The proportion of proprietary flow rose to 36%, reflecting progress in executing our mortgage strategy.

Speaker #3: We expect mortgage system growth to moderate in the fourth quarter, in response to a higher-rate environment and the recent federal government policy changes. In the near term, our growth is likely to be below system, given our initial cautious response to heightened competition.

Speaker #3: Compared with the second quarter, mortgage applications declined 11% in the third quarter, and have declined 20% since the Budget. Based on our analysis of credit checks, system-wide applications have fallen by slightly less than these amounts.

Speaker #3: These trends remain broadly consistent with our economics team's housing credit growth forecasts of 6.8% in FY26 and 4.7% in FY27. Institutional lending and Australian business lending grew by 3% and 4%, respectively, as we continue to increase market share.

Nathan Goonan: These trends remain broadly consistent with our economics team housing credit growth forecast of 6.8% in FY26 and 4.7% in FY27. Institutional lending and Australian business lending grew by 3% and 4% respectively as we continued to increase market share. The RAMS transaction settled on 1 August, resulting in an AUD 15.4 billion reduction in mortgages. Net interest margin was stable at 189. Core NIM of 178 was flat compared with the H1 2026, although it was up 1 basis point in the quarter. As foreshadowed, the non-repeat of timing differences following the RBA rate changes in the H1 added 1 basis point. Lending margins were lower. The rate of compression moderated in institutional and business lending, while mortgage margin compression in Australia and New Zealand was more pronounced.

Speaker #3: The RAMS transaction settled on the 1st of August, resulting in a $15.4 billion reduction in mortgages. Net interest margin was stable at 189. Core NIM of 178 was flat compared with the first half 2026, although it was up 1 basis point in the quarter.

Speaker #3: As for shadowed, the non-repeat of timing differences following the RBA rate changes in the first half added 1 basis point. Lending margins were lower. The rate of compression moderated in institutional and business lending, while mortgage margin compression in Australia and New Zealand was more pronounced.

Speaker #3: The contraction in Australia reflected a modest increase in both new fixed-rate lending and switching, and the run-off in higher-margin accounts, while competition intensified in New Zealand as fixed-rate lending increased.

Nathan Goonan: The contraction in Australia reflected a modest increase in both new fixed-rate lending and switching, and the runoff in higher margin accounts, while competition intensified in New Zealand as fixed-rate lending increased. Deposit margins improved, reflecting benefits from the replicating portfolio and the higher interest rates on unhedged deposits. More customers qualifying for the bonus rate and a mix shift to higher yielding products partially offset these benefits. Liquid assets provided a modest benefit, reflecting favorable mix as liquid assets rose by less than average lending assets. The impact was slightly lower than previously expected, reflecting stronger than anticipated institutional deposit growth. The treasury and markets contribution of 11 basis points was stable. For the H2, we continue to expect a replicating portfolio tailwind of 2 basis points.

Speaker #3: Deposit margins improved, reflecting benefits from the replicating portfolio and the higher interest rates on unhedged deposits. More customers qualifying for the bonus rate, and a mix shift to higher-yielding products, partially offset these benefits.

Speaker #3: Liquid assets provided a modest benefit, reflecting favorable mix as liquid assets rose by less than average lending assets. The impact was slightly lower than previously expected, reflecting stronger-than-anticipated institutional deposit growth.

Speaker #3: The Treasury and Markets contribution of 11 basis points was stable. For the second half, we continue to expect a replicating portfolio tailwind of 2 basis points.

Speaker #3: While immaterial to revenue, the impact of liquids is now expected to be neutral or a slight drag, reflecting ongoing deposit growth. Lending margins are likely to contract, given heightened mortgage competition in both Australia and New Zealand.

Nathan Goonan: While immaterial to revenue, the impact of liquids is now expected to be neutral or a slight drag, reflecting ongoing deposit growth. Lending margins are likely to contract given heightened mortgage competition in both Australia and New Zealand. The benefit of higher rates on deposit margins is expected to be offset by a combination of both rate and mix impacts, including higher qualifying on savings balances. Expenses were well managed, with the 1% increase reflecting the averaging impact from higher salary and wages, and our continued investment in our business. We remain on track for structural productivity savings of more than AUD 550 million in FY26. Total investment spend is expected to be approximately AUD 2 billion. Within that, there has been a slight acceleration in UNITE, which is now expected to be modestly above the top end of the previously guided range of AUD 850 million to AUD 900 million.

Speaker #3: And the benefit of higher rates on deposit margins is expected to be offset by a combination of both rate and mix impacts, including higher qualifying on savings balances.

Speaker #3: Expenses were well managed, with the 1% increase reflecting the averaging impact from higher salaries and wages, and our continued investment in our business. We remain on track for structural productivity savings of more than $550 million in FY26.

Speaker #3: Total investment spend is expected to be approximately $2 billion. Within that, there has been a slight acceleration in Unite, which is now expected to be modestly above the top end of the previously guided range of $850 to $900 million.

Nathan Goonan: Within that, there has been a slight acceleration in UNITE, which is now expected to be modestly above the top end of the previously guided range of AUD 850 million to AUD 900 million. We now expect amortization to decline in the H2, reflecting timing of the completion of non-UNITE projects. Consistent with trends we outlined at the H1, businesses continue to show resilience, and while consumer spend has slowed marginally, it remains at reasonable rate of growth by historical standards. Credit quality metrics remain sound. Stressed exposures to total committed exposures increased 3 basis points. This reflects a modest increase in watchlist and substandard exposures in property, utility, and manufacturing sectors. Our non-retail portfolio continues to be well diversified across sectors and geographies. Households have been resilient in the face of higher interest rates and cost of living pressures.

Speaker #3: We now expect amortization to decline in the second half, reflecting the timing of the completion of non-Unite projects. Consistent with the trends we outlined at the first half, businesses continue to show resilience, and while consumer spend has slowed marginally, it remains at a reasonable rate of growth by historical standards.

Nathan Goonan: We now expect amortization to decline in the H2, reflecting timing of the completion of non-UNITE projects. Consistent with trends we outlined at the H1, businesses continue to show resilience, and while consumer spend has slowed marginally, it remains at reasonable rate of growth by historical standards. Credit quality metrics remain sound. Stressed exposures to total committed exposures increased 3 basis points. This reflects a modest increase in watchlist and substandard exposures in property, utility, and manufacturing sectors. Our non-retail portfolio continues to be well diversified across sectors and geographies. Households have been resilient in the face of higher interest rates and cost of living pressures. Mortgage delinquencies edged up 1 basis point to 58 basis points, and hardship balances rose 5 basis points. Credit impairment charges were stable at 10 basis points of average gross loans.

Speaker #3: Credit quality metrics remain sound. Stressed exposures to total committed exposures increased 3 basis points. This reflects a modest increase in watchlist and sub-standard exposures in the property, utility, and manufacturing sectors.

Speaker #3: Our non-retail portfolio continues to be well diversified across sectors and geographies. Households have been resilient in the face of higher interest rates and cost-of-living pressures.

Speaker #3: Mortgage delinquencies edged up 1 basis point to 58 basis points, and hardship balances rose 5 basis points. Credit impairment charges were stable at 10 basis points of average gross loans.

Nathan Goonan: Mortgage delinquencies edged up 1 basis point to 58 basis points, and hardship balances rose 5 basis points. Credit impairment charges were stable at 10 basis points of average gross loans. Total credit provisions rose marginally and at AUD 5.3 billion are now AUD 2 billion above our base case. Collectively assessed provisions to credit risk weighted assets decreased 2 basis points to 127, while total provisions to gross loans were stable at 58 points. Modeled collective assessed provisions were slightly higher. Revised economic forecasts provided a modest release. This was more than offset by management judgments, including updates to the downside severity methodology and increases in overlays. The CET1 capital ratio remains strong at 12.1%.

Speaker #3: Total credit provisions rose marginally, at $5.3 billion and now $2 billion above our base case. Collectively assessed provisions to credit risk-weighted assets decreased 2 basis points to 127.

Nathan Goonan: Total credit provisions rose marginally and at AUD 5.3 billion are now AUD 2 billion above our base case. Collectively assessed provisions to credit risk weighted assets decreased 2 basis points to 127, while total provisions to gross loans were stable at 58 points. Modeled collective assessed provisions were slightly higher. Revised economic forecasts provided a modest release. This was more than offset by management judgments, including updates to the downside severity methodology and increases in overlays. The CET1 capital ratio remains strong at 12.1%. The reduction in CET1 reflects a payment of the H1 2026 dividend and an increase in risk-weighted assets, more than offsetting earnings for the quarter. Various movements in risk-weighted assets are outlined in the materials. We received a 23 basis point benefit from the completion of the RAMS portfolio sale on 1 August.

Speaker #3: While total provisions to gross loans were stable at 58 basis points, modelled collectively assessed provisions were slightly higher. Revised economic forecasts provided a modest release.

Speaker #3: This was more than offset by management judgments, including updates to the downside severity methodology and increases in overlays. The CET1 capital ratio remained strong at 12.1%.

Speaker #3: The reduction in set one reflects a payment of the half-year 2026 dividend, and an increase in risk-weighted assets, more than offsetting earnings for the quarter.

Nathan Goonan: The reduction in CET1 reflects a payment of the H1 2026 dividend and an increase in risk-weighted assets, more than offsetting earnings for the quarter. Various movements in risk-weighted assets are outlined in the materials. We received a 23 basis point benefit from the completion of the RAMS portfolio sale on 1 August. To conclude, the performance for this quarter demonstrates solid progress against our plans in a competitive environment. Disciplined execution is driving our momentum. We're striving to be more efficient while investing in our business. With that, I'll hand back to Justin for questions.

Speaker #3: Various movements in risk-weighted assets are outlined in the materials. We received a 23-basis-point benefit from the completion of the RAMS portfolio sale on 1 August.

Speaker #3: To conclude, the performance for this quarter demonstrates solid progress against our plans in a competitive environment. Disciplined execution is driving our momentum, as we strive to be more efficient while investing in our business.

Nathan Goonan: To conclude, the performance for this quarter demonstrates solid progress against our plans in a competitive environment. Disciplined execution is driving our momentum. We're striving to be more efficient while investing in our business. With that, I'll hand back to Justin for questions.

Speaker #3: And with that, I'll hand back to Justin for questions.

Speaker #1: Thanks, Nathan. And just to restate, we've got a dozen of you in the queue, so if you could limit your questions to one, that would be helpful for us to get through.

Justin McCarthy: Thanks, Nathan. Just to restate, we've got a dozen of you in the queue, so if you could limit your questions to one, that would be helpful for us to get through. Our first question comes from Richard Wiles from Morgan Stanley. Richard?

Speaker #1: Our first question comes from Richard Wiles from Morgan Stanley. Richard?

Speaker #2: Good morning, Justin. Good morning, Nathan. You mentioned that your mortgage application run rate post-budget was 26,000. That's down about 20% on the March quarter and maybe 25% on the December quarter.

Richard Wiles: Good morning, Justin. Good morning, Nathan.

Justin McCarthy: G'day, Richard.

Richard Wiles: You mentioned that your mortgage application run rate post-budget was 26,000. That's down about 20% on Q1 and maybe 25% on Q4. Nathan, can you tell us how far investor applications have fallen since the budget?

Speaker #2: Nathan, can you tell us how far investor applications have fallen since the Budget?

Speaker #3: Yeah, thanks. Richard, that's a good question, actually, because I think it's worth just reflecting on the number of factors that are creating some uncertainty in that market, and in particular around rates and budget changes.

Nathan Goonan: Yeah. Thanks, Richard. It's a good question actually, because I think it's worth just reflecting on the number of factors that are creating some uncertainty in that market and in particular around rates and budget changes. Owner occupier's down 18% and investor down 26%, which, I guess we probably draw some conclusion from that the rate impact is probably equal or potentially a bigger impact than anything that happened in the budget.

Speaker #3: So, owner-occupiers are down 18%, and investors are down 26%, which—I guess we can probably draw some conclusions from that—that the rate impact is probably equal to, or potentially a bigger impact than, anything that happened in the budget.

Speaker #2: And that 18 and 26, what number are you comparing it with, Nathan? Is that—

Richard Wiles: That 18 and 26, what number are you comparing it with Nathan?

Speaker #1: Comparing it to 2020, since the budget—Richard, yeah.

Nathan Goonan: Comparing it to the 20% since the budget, Richard. Yeah. On a like for like basis.

Speaker #3: On a like-for-like basis. Yeah, yeah. One other way to look at it, Richard, is just to say if you did look at the period from the budget to now, and you picked up the five-year average of our applications, we're down about 11% from that five-year average.

Richard Wiles: Okay.

Nathan Goonan: Yeah. One other way to look at it, Richard, is just to say, if you did look at the period from the budget to now and you picked up the five-year average of our applications, we're down about 11% from that five-year average.

Speaker #2: That's total mortgages.

Richard Wiles: That's total mortgages?

Speaker #3: Yes. Yeah.

Nathan Goonan: Yes. Yeah.

Speaker #2: Okay. Thank you.

Richard Wiles: Okay. Thank you.

Speaker #1: Our next question comes from Matthew Wilson from Jordan. Matthew?

Justin McCarthy: Our next question comes from Matthew Wilson from Jarden. Matthew?

Speaker #4: Yeah, good morning. Matt Wilson, Jordan. Hi, team. Just following on Richard's question on slide 2—you say average monthly mortgage volumes. What are actual monthly mortgage volumes doing?

Matthew Wilson: Yeah, good morning. Matt Wilson, Jarden. Hi, team. Just following on Richard’s question on slide two, you say average monthly mortgage volumes. What are actual monthly mortgage volumes doing? That would imply that the endpoint is much worse than the start point. It’s a nuance, could you articulate that?

Speaker #4: Because that would imply that the endpoint is much worse than the start point. It's a nuance, but could you articulate that?

Speaker #3: Yeah, thanks, Matt. And good morning. We probably have had a little bit more in June, where it's been a bit more compressed. But I would say I think sometimes the seasonality, month to month, is quite predictable.

Nathan Goonan: Yeah. Thanks, Matt, and good morning. We probably have had a little bit more in June where it's been a bit more compressed, but I would say, I think sometimes the seasonality month to month is quite predictable when you can have, in June, a fair bit of tax structuring and different things that happen around that. I would be cautious about, the reason we've done the quarterly is we think that's a more reflective trend. I would say, overall, Matt, on this housing point, our fundamental point today will be to say, I think we do need to let this play out a little bit. The trends that we're seeing, we still believe are very consistent with economics forecast of 4.7% growth in 2027, 6.8% in FY26.

Speaker #3: And you can have, in June, a fair bit of tax structuring and different things that happen around that. So I would be cautious. The reason we've done the quarterlies is we think that's a more reflective trend.

Speaker #3: And I would say, overall, Matt, on this housing point, our fundamental point today will be to say I think we do need to let this play out a little bit.

Speaker #3: The trends that we're seeing, we still believe, are very consistent with economic forecasts of 4.7% growth in 2027 and 6.8% in FY26. So, we'd be cautious about drawing too many conclusions from one month of data, but you'd be right to say June was lower than the prior two months.

Nathan Goonan: We'd be cautious about drawing too many conclusions on one month of data, but you'd be right to say June was lower than the prior two months.

Speaker #4: And July would follow, I imagine.

Matthew Wilson: July would follow, I imagine.

Speaker #3: Yeah, there's a little bit of—you're getting into the real micro now, Matt—but I did see in our weeklies that applications were up last week.

Nathan Goonan: Yeah. There's a little bit of You're getting into the real micro now, Matt, but I did see in our weeklies that applications were up last week, relative to where they'd been. Let's see how it plays out. We're looking forward to being on our feet in November and have a bigger sample set to be able to really talk through it. One thing, as I said in Richard's comments, I think we do know that rate volatility is the biggest determining factor of uncertainty in the mortgage market, and we've gone from a period, even if you just took our economic forecast, where we're expecting two rate rises, and now we're potentially suggesting the next rate move is down. That type of uncertainty does particularly put the mortgage market into a bit of a suspended animation.

Speaker #3: Relative to where they had been. So let's see how it plays out. We're looking forward to being on our feet in November and having a bigger sample set to be able to really talk through it.

Speaker #3: And one thing, as I said to Richard’s comments, I think we do know that rate volatility is the biggest determining factor of uncertainty in the mortgage market.

Speaker #3: And we've gone from a period, even if you just took our economic forecast, where we were expecting two rate rises, and now we're potentially suggesting the next rate move is down.

Speaker #3: And that type of uncertainty does, particularly, put the mortgage market into a bit of a suspended animation.

Speaker #4: Yeah, understand. Thanks, team.

Matthew Wilson: Yes. Understand. Thanks, team.

Speaker #3: Thanks, Matt.

Nathan Goonan: Thanks, Matt.

Speaker #1: Thanks, Matt. Our next question comes from Andrew Lyons from Jefferies. Andrew?

Justin McCarthy: Thanks, Matt. Our next question comes from Andrew Lyons from Jefferies. Andrew?

Speaker #5: Thanks, and good morning. Nathan, you've highlighted good momentum in the franchise, with both loans and deposits growing by 7% on the PCP. However, when we look at quarterly revenues on a PCP basis, they're actually down slightly.

Andrew Lyons: Thanks. Good morning. Nathan, you've highlighted good momentum in the franchise with both loans and deposits growing by 7% on the PCP. However, when we look at quarterly revenues on a PCP basis, they're actually down slightly. Now, I recognize there can be a lot of noise in these quarterly results, but can you perhaps just talk to this trend, and obviously with the replicating portfolio easing from a tailwind perspective, just the extent to which we could see this sort of year-over-year revenue trend improve going forward?

Speaker #5: Now, I recognize there can be a lot of noise in these quarterly results, but can you perhaps just talk to this trend? And obviously, with the replicating portfolio easing from a tailwind perspective, could you discuss the extent to which we might see this year-over-year revenue trend improve going forward?

Speaker #3: Yeah, thanks, Andrew. And I think in the pre-prepareds, I did call out, and I think I'm very conscious about sort of explaining things away where we say, like, this is good and this is good, and then it gets offset by that.

Nathan Goonan: Yeah. Thanks, Andrew, I think, in the pre-prepareds I did call out, I think I'm very conscious about explaining things away where we say, "This is good and this is good, then it gets offset by that." I do think if you look at some of the underlying revenue in the quarter, revenue was up 4% in our institutional business, NII and our institutional business up 6%. In business and wealth, we had revenue in the quarter up 3%, and in our consumer bank, NII up 3% and revenue up 2%. We do feel like we've got that underlying revenue growth in the franchise, Andrew. Unfortunately, we had 3% decline in non-interest income that I can talk to. Treasury has stabilized in the quarter, but is still down on the H1 average.

Speaker #3: But I do think if you look at some of the underlying revenue in the quarter, revenue is up 4% in our Institutional business. NII in our Institutional business is up 6%, and in Business and Wealth as well.

Speaker #3: We had revenue in the quarter up 3%, and in our Consumer Bank, NII up 3% and revenue up 2%. So we do feel like we’ve got that underlying revenue growth in the franchise.

Speaker #3: Andrew, unfortunately, we've had a 3% decline in, sort of, non-interest income that I can talk to. Treasury has stabilized in the quarter, but was still down on the first half average.

Speaker #3: And then, obviously, New Zealand had a little bit of a challenging period. So I guess I don't want to get into the game of, like, if you look over here, it's all good.

Nathan Goonan: Obviously New Zealand's had a little bit of a challenging period. I guess I don't want to get into the games of, if you look over here, it's all good, if you exclude these things, it's all good. I do think underlying, we've got that momentum in the franchise, I think that is giving us the opportunity to get that earnings growth over time. I think underlying, we're seeing it, which gives us some confidence in that.

Speaker #3: And if you exclude these things, it's all good. But I do think, underlying, we've got that momentum in the franchise, and I think that is giving us the opportunity to get that earnings growth over time.

Speaker #3: And I think, underlying, we're seeing it, which gives us some confidence in that.

Speaker #2: Good.

Speaker #1: Thanks, Andrew. Our next question comes from Jonathan Mott from Baron Joey. Jonathan?

Justin McCarthy: Thanks, Andrew. Our next question comes from Jonathan Mott from Barrenjoey. Jonathan?

Speaker #4: Yeah, thanks. If we could just ask a question on the margin—and specifically, you called out competition and the change in the savings percentage of people getting the bonus rate.

Jonathan Mott: Yeah, thanks. If I could just ask a question on the margin, specifically you called out competition and the change in the savings, percentage of people getting the bonus rate. If we actually look in the last couple of weeks, it appears that competition's intensifying. CBA started cutting their mortgage rates. Everyone else has had to follow, then we're seeing some savings rates. ING's I think now offering up to 6%. Would you be expecting into this next 3 to 6 months, the impact of competition to be intensifying? Also that bonus rate comment, what percentage of customers are now qualifying for the bonus rate?

Speaker #4: If we actually look at the last couple of weeks, it appears that competition is intensifying. CBA started cutting their mortgage rates, and everyone else has had to follow.

Speaker #4: And then we're seeing some savings rates. So ING thinks they're offering up to 6%. So would you be expecting, into this next sort of three to six months, the impact of competition to be intensifying?

Speaker #4: And also, that bonus rate comment, what percentage of customers are now qualifying for the bonus rate?

Speaker #3: Yeah, thanks. John, maybe I'll just answer the point question at the end first. I'd say, yeah, we've had about a percentage point uptick in the quarter on the qualifying on the bonus rate.

Nathan Goonan: Thanks, John. Maybe I'll just answer the point question at the end first. I'd say, we've had about a 1 percentage point uptick in the quarter on the qualifying on the bonus rate, so we'd be now at 86. I think there is some sort of upward pressure on that, John. It's one of the things that we're deliberately doing, is just trying to stimulate a little bit more in that regard. We did have, as I said in my pre-prepared, an interesting quarter in consumer deposits where probably for the first time in a number of periods, we had our savings product stable, marginally down. A little bit of that seasonality. We did have some growth in TDs, which is probably the first time we've had term deposits in our consumer book growing by more than our savings product, certainly since about 2023.

Nathan Goonan: Thanks, Jon. Maybe I'll just answer the point question at the end first. I'd say, we've had about a 1 percentage point uptick in the quarter on the qualifying on the bonus rate, so we'd be now at 86. I think there is some sort of upward pressure on that, Jon. It's one of the things that we're deliberately doing, is just trying to stimulate a little bit more in that regard. We did have, as I said in my pre-prepared, an interesting quarter in consumer deposits where probably for the first time in a number of periods, we had our savings product stable, marginally down. A little bit of that seasonality. We did have some growth in TDs, which is probably the first time we've had term deposits in our consumer book growing by more than our savings product, certainly since about 2023.

Speaker #3: So we'd be, sort of, now at the 86. And I think there is some sort of upward pressure on that. John, one of the things that we're deliberately doing is just trying to stimulate a little bit more in that regard.

Speaker #3: We did have, as I said in my pre-prepared remarks, an interesting quarter in consumer deposits, where probably for the first time in a number of periods, we had our savings product sort of stable—marginally down, a little bit of that seasonality—but we did have some growth in TDs, which is probably the first time we've had term deposits in our consumer book growing by more than our savings product, certainly since about 2023.

Speaker #3: So, margins are still better on those savings products, and we're making some changes there just to stimulate a little bit more qualification, which we think overall gives a better margin outcome than the TDs.

Nathan Goonan: Margins are still better on those savings products, and we're making some changes there just to stimulate a little bit more qualification, which we think overall give a better margin outcome than the TDs. Sorry, I should just say that will probably lead to even a little bit more increase in that qualification rate. Your broader point on competition, I think is well noted. The impact of that increased mortgage competition, not necessarily evident in our Q3 margin outcomes, but I do think we're probably expecting now that we're growing at a subsystem level as we were a little bit cautious when that competition came in.

Speaker #3: Your broader point on—and sorry, I should just say—that will probably lead to even a little bit more increase in that qualification rate.

Speaker #3: Your broader point on competition, I think, is well noted. The impact of that increased mortgage competition is not necessarily evident in our third quarter margin outcomes, but I do think that we’re probably expecting now that we're growing at a sub-system level, as we were a little bit cautious when that competition came in.

Speaker #3: We're probably back participating a little bit more in that, but I'd still expect us to be sub-system. And I'd still expect us to be talking about mortgage competition as being a more pronounced part of our margin outcomes when we get to the full-year results.

Nathan Goonan: We're probably back participating a little bit more in that. I'd still expect us to be subsystem, and I'd still expect us to be talking about mortgage competition as being a more pronounced part of our margin outcomes when we get to the full year results.

Speaker #4: Thank you.

Jonathan Mott: Thank you.

Speaker #1: Our next question comes from Ed Henning from CLSA. Ed?

Justin McCarthy: Our next question comes from Ed Henning from CLSA. Ed?

Speaker #6: Hi, thanks for taking my question. Can I just have one on expenses? Can you just talk about any seasonality running into the fourth quarter?

Ed Henning: Hi. Thanks for taking my question. Can I just have one on expenses? Can you just talk about any seasonality running into the Q4? You talked about the amortization decline coming through. Does that see the expense growth soften in the Q4, just given the amort declines? How should we think about that?

Speaker #6: You talked about the amortization decline coming through. So does that mean we’ll see expense growth soften in the fourth quarter, just given the amortization declines?

Speaker #6: Or how should we think about that?

Speaker #3: Yeah, thanks, Ed. And good morning. Now, you should expect that we'll still have some seasonal uptick of expenses in the fourth quarter. I think, as you know, Ed, I do prefer to look at expenses on an annual basis, and then even when we're talking about the halves, I think we have a lot of seasonality.

Nathan Goonan: Yeah, thanks Ed, and good morning. No, you should expect that we'll still have some seasonal uptick of expenses in the Q4. I think, as you know Ed, I do prefer to look at expenses on an annual basis. Even when we're talking about in the halves, I think we have a lot of seasonality. When you're talking about at the quarters, it's particularly pointed that you can get some seasonality. I would say there's probably nothing different, materially different in the quarter relative to our positioning that we would've given you at the half, except for the mix shift in investment spend. A bit more of a tilt towards UNITE that will now be slightly above that top end of the range we'd previously given.

Speaker #3: So when you're talking about it at the quarters, it's particularly pointed that you can get some seasonality. I would say there's probably nothing materially different in the quarter relative to our positioning that we would have given you at the half.

Speaker #3: Except for the mix shift in investment spend, so a bit more of a tilt towards Unite—that's had, will now be, slightly above that top end of the range we'd previously given.

Speaker #3: And then, given Unite has squeezed out a bit of other spend, some of the programs that would have started amortizing, or we expected to start amortizing, won't kick in yet.

Nathan Goonan: Given UNITE has squeezed out a bit of other spend, some of the programs that would've started amortizing or we expected to start amortizing, won't kick in yet. Amortization likely to be a bit of a tailwind. If I step back from the quarter, I think we've had another good quarter on expenses. I think, if we think about the annual plans that we set ourselves, I think we continue to track a little bit better than where we expected. We're very focused on productivity, and so we think that we're doing a good job on the 550. It's clearly just such a critical focus for us alongside UNITE to make this organization more efficient. All that said, I think we are executing well, but we would expect Q4 will be seasonally higher than where we've been.

Speaker #3: So, amortization is likely to be a bit of a tailwind. If I step back from the quarter, I think we've had another good quarter on expenses.

Speaker #3: And I think if we think about the annual plans that we set ourselves, I think we continue to track a little bit better than where we expected. We're very focused on productivity, and so we think that we're doing a good job on the $550.

Speaker #3: And it's clearly just such a critical focus for us, alongside Unite, to make this organization more efficient. All that said, I think we are executing well, but we would expect the fourth quarter will be seasonally higher than where we've been.

Speaker #1: Thanks, Ed. Our next question comes from Brian Johnson from MST. Brian?

Justin McCarthy: Thanks, Ed.

Justin McCarthy: Yeah.

Ed Henning: Yeah.

Justin McCarthy: Our next question comes from Brian Johnson from MST. Brian.

Speaker #5: Good morning, and thank you very much. Nathan, I'm just intrigued—could you run us through a little bit more detail on what happened to the non-interest revenues in this quarter?

Brian Johnson: Morning. Thank you very much. Nathan, I'm just intrigued. Could you run us through a little bit more detail on what happened to the non-interest revenues in this quarter? Not just the quantum of it, which I think we can all work out, but you spoke about timing and one-off items. Can you just give us a little bit more clarity on that and what's the outlook for that in Q4?

Speaker #5: Not just the quantum of it, which I think we can all work out, but you spoke about timing and one-off items. Can you just give us a little bit more clarity on that, and what's the outlook for that in the fourth quarter?

Speaker #3: Yeah, thanks, Brian. And unfortunately, the thing with the quarterly is around these the fees and OOI. If I just maybe I'll just make some comments ex-markets and treasury, and then I'll make some markets and treasury comments.

Nathan Goonan: Yeah, thanks, Brian. Unfortunately, it's the thing with the quarterlies around the fees and OOI. Maybe I'll just make some comments ex markets and treasury. Then I'll make some markets and treasury comments, Brian, if that's helpful. I would expect, we had a one-off in Q2 that went in our favor, and then we've had some remediation and some other things come through in Q3 that went against us. It's particularly lumpy where you're getting both sides of that trade moving against you when you look at a quarter-on-quarter trend. I would say we still expect modest growth for the H2 on our non-interest income line. If I just talked about treasury and markets for a minute, I think treasury, while the majority of that is going through NII, the Q3 was much more back to normal levels.

Speaker #3: Brian, if that's helpful. I would expect we had a one-off in the second quarter that went in our favor, and then we've had some remediation and some other things come through in the third quarter that went against us.

Speaker #3: So it's particularly lumpy, where you're getting both sides of that trade moving against you when you look at a quarter-on-quarter trend.

Speaker #3: I would say we still expect modest growth for the second half on our non-interest income line. If I just talk about Treasury and Markets for a minute, I think Treasury – while the majority of that is going through NII – the third quarter was much more back to normal levels.

Speaker #3: I think at the half we spoke about our performance relative to five-year averages. We're still a little bit below that, but much more in line with it now.

Nathan Goonan: I think at the H1 we spoke about our performance relative to 5-year averages. We're still a little bit below that, but much more in line with it now. A much more normal quarter. You'll remember we had a very strong Q1, a very weak Q2. On treasury, we're 6% down on the H1 average, but we'd be up about 60% on a quarter-on-quarter basis. In markets, we were flat on the quarter, but up 3% on the H1 average. Some DVA favorability in that. We were up 3% on the H1 average in markets. I would say overall a lot of that will normalize out and I would expect, as I said, non-interest income to be modestly up for the H1.

Speaker #3: So, a much more normal quarter. And you'll remember we had a very strong first quarter and a very weak second quarter. So, on Treasury, we're sort of 6% down on the first half average, but we'd be up about 60% on a quarter-on-quarter basis.

Speaker #3: And then in Markets, we were flat on the quarter, but up 3% on the first half average. So, some DVA favorability in that, but we were up 3% on the first half average in Markets.

Speaker #3: So, I would say, overall, a lot of that will normalize out, and I would expect, as I said, non-interest income to be sort of modestly up for the half.

Speaker #1: Thanks, Brian. Our next question.

Justin McCarthy: Thanks, Brian. Our next question.

Speaker #5: Quite interesting in the fourth quarter.

Nathan Goonan: Quite substantially in the Q4.

Speaker #1: The next question comes from Andrew Triggs at JP Morgan. Andrew?

Justin McCarthy: comes from Andrew Triggs from JPMorgan. Andrew.

Speaker #5: Thanks for that this morning, Nathan. Maybe just to follow up on Andrew's question around the revenue side of things. Obviously, just the percent growth, which in the quarter shall mostly be, let's say, account related.

Andrew Triggs: Thanks. Good morning, Nathan.

Nathan Goonan: Andrew.

Andrew Triggs: Maybe just to follow up on Andrew's question around the revenue side of things. Obviously, just the % growth, which in the quarter, which looked mostly to be, let's say, account related. If you look forward into Q4, there seems to be a lot of emerging headwinds on the margin around basis risks, which we haven't talked about this morning, TD mix deterioration. The last rate hike was in May, so it's mostly in the base. Mortgage competition's picking up, deposit competition's picking up, replicating portfolios slowing. Doesn't sound like any of that's particularly positive. What confidence, I guess, do you have that you'll be able to deploy what is a very healthy capital surplus and actually drive profitable growth with that?

Speaker #5: If you look forward into Q4, there seem to be a lot of sort of emerging headwinds on the margin around basis risk, which we haven't talked about this morning.

Speaker #5: TD mix deterioration; the last rate hike was in May, so it's mostly in the base. Mortgage competition's picking up, deposit competition's picking up, replicating portfolio slowing.

Speaker #5: Doesn’t sound like any of that’s particularly positive. I mean, what confidence, I guess, do you have that you’ll be able to deploy what is a very healthy capital surplus and actually drive profitable growth with that?

Speaker #3: Yeah, thanks, Andrew. And good morning. Maybe I'll, if you if this is helpful, I'll just maybe give it as a take it as a margin question and just a little bit on outlook there.

Nathan Goonan: Yeah, thanks, Andrew, and good morning. If this is helpful, I'll just maybe take it as a margin question and just a little bit on outlook there, then if that doesn't help, circle back and let me know. I think you've touched on probably all of the moving parts. I'd say, no change to our guidance around replicating portfolio or timing benefit of the rate lag. I think they still remain as they were at H1. Liquids is neutral to revenue, but we're obviously flagging today that that could flip from being a benefit to a slight drag given where our liquid levels are as we come into Q4. On lending, I think we've got a couple of things offsetting here, but we were clearly always flagging that we would get continued lending margin compression.

Speaker #3: And then, if that doesn't help, circle back and let me know. I think you've touched on probably all of the moving parts. I'd say there's no change to our guidance around replicating portfolio or timing benefit of the rate lag.

Speaker #3: So I think they still remain as they were at the half. Liquid is neutral to revenue, but we've obviously flagged today that that could flip from being a benefit to a slight drag, given where our liquid levels are as we come into the fourth quarter.

Speaker #3: On lending, I think we've got a couple of things offsetting here, but we were clearly always flagging that we would get continued lending margin compression.

Speaker #3: As we said, it's a bit more spiked in Australian mortgages and New Zealand, and a little bit less in institutional and business. I think the reasons for that will probably change in the fourth quarter, but as I've said in previous questions, I'd expect that mortgage margin will be a feature of our conversations when we get to the full-year results.

Nathan Goonan: As we said, it's a bit more spiked in Australian mortgages and New Zealand and a little bit less in institutional and business. I think the reasons for that probably change in Q4. As I've said in the previous questions, I'd expect that mortgage margin will be a feature of our conversations when we get to the full year results. You'd called out that we've most recently had a little bit of a spike in bills OIS, which is not going to help. I think it all swings on deposits, Andrew. You've flagged it well. The benefits from the rate rise will still have some benefit, but the majority of that has flown through.

Speaker #3: And you called out that we've most recently had a little bit of a spike in bills' voice, which is not going to help. And then I think it all swings on deposits, Andrew, and so you've flagged it well.

Speaker #3: The benefits from the rate rise will still have some effect, but the majority of that is flowing through. TD margins were much better at the start of the quarter than they were at the end.

Nathan Goonan: TD margins were much better at the start of the quarter than they were at the end. That is going to be a drag as we go in. As I said to John's question, we're likely to see higher qualifying on savings rates that we expect to bounce back. I think, it's hard to paint a picture that it's going up in margins, Andrew. I think a lot will depend on how the deposits play out and all the different moving parts there. Maybe just make one comment on your macro thing. I think, what have we got to do to continue to be able to drive earnings growth? It's the things that we're intensely focused on, which is we need to keep the momentum in the balance sheet.

Speaker #3: And so that is going to be a drag as we go in. And then, as I said to John's question, we're likely to see higher qualifying on savings rates, which we expect to bounce back.

Speaker #3: So, I think it's hard to paint a picture that it's going up in margins, Andrew. I think a lot will depend on how the deposits play out and all the different moving parts there.

Speaker #3: Maybe just to make one comment on your macro thing — I think, what have we got to do to continue to be able to drive earnings growth?

Speaker #3: And it's the things that we're intensely focused on, which is we need to keep the momentum in the balance sheet. We need to do a good job on delivering the whole of bank to whole of customer so that we get our diversified revenues.

Nathan Goonan: We need to do a good job on delivering the whole of bank, the whole of customer, so that we get our diversified revenues. I think we have got some green shoots of underlying revenue growth in our customer franchise. We've got to be very good on expenses, which we're very focused on.

Speaker #3: And I think we have got some green shoots of underlying revenue growth in our customer franchise. And then we've got to be very good on expenses, which we're very focused on.

Speaker #1: Thanks, Andrew. Our next question comes from Tom Strong from Citi. Tom?

Justin McCarthy: Thanks, Andrew. Our next question comes from Thomas Strong from Citi. Tom?

Speaker #5: Great. Thanks, Justin. And thanks, Nathan. I just had a question on the provisioning. I mean, you've topped up the provisions in this quarter, and conditions still remain relatively benign.

Thomas Strong: Great. Thanks, Justin, and thanks Nathan. I just had a question on the provisioning. You've topped up the provisions in this quarter. Conditions still remain relatively benign. Just had a query around the property price assumptions. You now expect resi property down 1% in 2026. Some of your peers are a bit more bearish than that. Can you just talk about how sensitive the ECL is to that resi property price? Or is it more sensitive, I guess, to the PD, just given the book overall is still well collateralized?

Tom Strong: Great. Thanks, Justin, and thanks Nathan. I just had a question on the provisioning. You've topped up the provisions in this quarter. Conditions still remain relatively benign. Just had a query around the property price assumptions. You now expect resi property down 1% in 2026. Some of your peers are a bit more bearish than that. Can you just talk about how sensitive the ECL is to that resi property price? Or is it more sensitive, I guess, to the PD, just given the book overall is still well collateralized?

Speaker #5: Just had a query around the property price assumptions. I mean, you now expect risky property down 1% in ’26. Some of your peers are a bit more bearish than that.

Speaker #5: Can you just talk about how sensitive the ECL is to that risky property price, or is it more sensitive, I guess, to the PD, just given the book overall is still well collateralized?

Speaker #3: Yeah, it's a good question, Tom, and good morning. Why don't we pick it up, and we'll give a more fulsome explanation at the full year.

Nathan Goonan: Yeah, it is a good question, Tom, and good morning. Why don't we pick it up, and we will give a more fulsome explanation at the full year. We do expect that Lucy will revise her forecast after the RBA meeting this week. I would expect we will have some movement there, and then as we do, we will flow that through our base case, so that will be a direct impact into the models, and then we can talk about the sensitivities then. What we have been doing, though, Tom, is we actually had favorability from putting Lucy's revised forecast through this quarter, and so then we have made a number of management judgments around the methodology for the downside severity and then the overlays. In particular on that downside severity methodology.

Speaker #3: We do expect that Lucy will revise her forecast after the RBA meeting this week, so I would expect we'll have some movement there.

Speaker #3: And then, as we do, we will flow that through our base case, so that will be a direct impact on the models. And then we can talk about the sensitivities then.

Speaker #3: What we've been doing, though, Tom, is given we actually had favorability from putting Lucy's revised forecast through this quarter. And so then we've made a number of sort of management judgments around the methodology for the downside severity, and then the overlays.

Speaker #3: In particular, on that downside severity methodology, there's some flex there as some of that economic data flows through. We can continue to look at that and make sure we get the right balance.

Nathan Goonan: There is some flex there as some of that economic data flows through that we can continue to look at that and make sure we get the right balance.

Speaker #1: Thanks, Tom. Our next question comes from Carlos Cacho from Macquarie. Carlos?

Justin McCarthy: Thanks, Tom. Our next question comes from Carlos Cacho from Macquarie. Carlos?

Speaker #5: Thanks, Justin. Nathan, thanks for the detail around application volumes. I was wondering, on some of those earlier questions, in a slightly different way: can you give us any color around what the mix of that 20% is between refis and purchases? Presumably, purchases are down a bit more than refinancing activity.

Carlos Cacho: Thanks, Justin. Nathan, thanks for the detail around application volumes. I was wondering, and to ask some of those earlier questions a slightly different way. Can you give us any color around what the mix of that 20% is between refis and purchases? Presumably, purchases are down a bit more than refinancing activity.

Speaker #3: Yeah, thanks, Carlos. I don't actually have that split on me, Carlos. I'd be happy to follow up on it, but your assumption is right.

Nathan Goonan: Yeah. Thanks, Carlos. I don't actually have that split on me, Carlos. I would be happy to follow up on it, but your assumption is right. We have had a little bit more refi, and that was what we were expecting coming in. More refi, less new home purchase. That would be true of the applications. It wouldn't necessarily be true of obviously the Q3 settlements. Yeah.

Speaker #3: We've had a little bit more refi, and that was what we were expecting coming in. So, more refi, less new home purchase. That would be true of the applications.

Speaker #3: It wouldn't necessarily be true of, obviously, the third quarter settlements.

Speaker #5: Yeah.

Speaker #1: Thanks, Carlos. Our next question comes from Matt Dungar from Bank of America Merrill Lynch. Matt?

Justin McCarthy: Thanks, Carlos. Our next question comes from Matt Dunger from Bank of America, Merrill Lynch. Matt?

Speaker #5: Yeah, thanks, Justin and Nathan. I just wondered if I could follow up on the increase in overlays you talked about, and the management judgment there.

Matt Dunger: Yeah. Thanks, Justin and Nathan. I just wondered if I could follow up on the increase in overlays. You talked about the management judgment there, Nathan. Is that on specific sectors? It appears in terms of the corporate and business stress, the only areas that are really increasing are transport and storage and maybe a slight uptick in manufacturing. I am just wondering if you can talk more specifically about what you are seeing to put some of these overlays on at the quarter.

Speaker #5: Nathan, is that on specific sectors? It appears, in terms of the corporate and business stress, the only areas that are really increasing are transport and storage, and maybe a slight uptick in manufacturing.

Speaker #5: I'm just wondering if you can talk more specifically about what you're seeing to put some of these overlays on at the quarter.

Speaker #3: Yeah, thanks, Matt. And maybe I'll just cover it quickly. We did see, as you called out, a slight uptick in stress in manufacturing, transport, utilities.

Nathan Goonan: Yeah. Thanks, Matt. Maybe I will just cover it quickly. We did see, as you called out, slight uptick in stress in manufacturing, transport, utilities. I would say utilities was effectively one single name. Transport and manufacturing was probably a little bit broader. What we did in the overlays, to answer the point question, we included manufacturing in our energy-intensive sectors. We had an overlay there. We just expanded that to pick up manufacturing, and we did raise a new overlay for discretionary spend. I think we included in the materials some detail around what we were seeing both in our business accounts and then in our consumer spending. The knock-on impact of a consumer that is making adjustments to the way they are living is, we have just thought it was prudent to put in something around discretionary spend.

Speaker #3: I'd say utilities was effectively one single name. Transport and manufacturing was probably a little bit broader. So what we did in the overlays, to answer the point question, was we included manufacturing in our energy-intensive sectors.

Speaker #3: So we had an overlay there. We just expanded that to pick up manufacturing. And we did raise a new overlay for discretionary spend. And I think we included in the materials some detail around what we were seeing both in our business accounts and then in our consumer spending. The knock-on impact of a consumer that's making adjustments to the way they're living is, we've just thought it was prudent to put in something around discretionary spend.

Speaker #1: Thanks, Matt. Our next question comes from Brendan Sproul from Goldman Sachs. Brendan?

Justin McCarthy: Thanks, Matt. Our next question comes from Brendan Sproules from Goldman Sachs. Brendan?

Speaker #5: Good morning, Brendan from Goldman Sachs. Just a quick question on your business lending momentum across both institutional and business, and wealth. Obviously, you've got some pressures coming on the NIMs.

Brendan Sproules: Good morning. Brendan from Goldman Sachs. A quick question on your business lending momentum across both institutional business and wealth. Obviously, you've got some pressures coming on the NIMs, in terms of the pipelines and the ability to continue to grow the balance sheet, what are we seeing towards the end of the quarter?

Speaker #5: But in terms of the pipelines and the ability to continue to grow the balance sheet, what were you seeing towards the end of the quarter?

Speaker #3: Yeah, thanks. Brendan, I think, very similar to what we would have been speaking about at the half year. I think business credit is still looking quite good at the top end.

Nathan Goonan: Thanks, Brendan. I think very similar to what we would've been speaking about at the half year. I think business credit is still looking quite good at the top end. We've got business lending credit forecasts of something like 8 and a little bit for 2026, and I think we have it above 6 for FY27. We would say within that it's very mixed. Small is much tougher. SME is a little bit better than small. In our corporate sector in particular, there's quite strong growth. When you get into institutional, you do get into more of those macro themes. In terms of pipelines and growth, I think that we would be very confident that we can continue at trends that are pretty similar to what you've seen this quarter, certainly for Q4.

Speaker #3: So, we've got business lending credit forecasts of something like 8 and a little bit for '26, and I think we have it above 6 for FY '27.

Speaker #3: We would say within that, it's very mixed. So small is much tougher. SMEs—a little bit better than small—but the top end of town, in our corporate sector in particular, there's quite strong growth.

Speaker #3: And then, when you get into institutional, you do get into more of those macro themes. In terms of pipelines and growth, I think that we would be very confident that we can continue at trends pretty similar to what you've seen this quarter.

Speaker #3: Certainly, for the fourth quarter, and I would say that would be a trend that we would expect to continue into the first part of '27.

Nathan Goonan: I would say that would be a trend that we would expect would continue into the first bit of 2027.

Speaker #1: Thanks, Brendan. Our final question comes from John Story from UBS. John?

Justin McCarthy: Thanks, Brendan. Our final question comes from John Storey from UBS. John.

Speaker #5: Hey, thanks very much, Justin. And good morning, Nathan. I just wanted to ask you about the retention of the book, right? So it comes back to your slide nine.

John Storey: Hey, thanks very much, Justin, and good morning, Nathan. I just wanted to ask you about the retention of the book. It comes back to your slide nine. Just any behavioral changes that you're seeing in your client base there. It definitely looks like there's a little bit of a trend in terms of the percentage of IPL, PNI that's moving into INO. Yeah, maybe you could just speak to retention and duration of the book.

Speaker #5: Just kind of any behavioral changes that you've seen in your client base here. There definitely looks like there's a little bit of a trend in terms of the percentage of IPL, P&I that's moving into I&O.

Speaker #5: Yeah, maybe you could just speak to retention and duration of the book.

Speaker #3: Yeah, thanks. I'm just pulling up the slide, or Justin's one. Yeah, I've got that. Sorry, yeah, thank you. Yeah, John, look, I think that it's probably apropos of the earlier conversations and Richard's questions.

Nathan Goonan: Yeah, thanks. I'm just pulling up the slide. Or Justin, what-

Justin McCarthy: Yeah, I've got that. Sorry. Yeah. Thank you.

Nathan Goonan: Yeah, John, look, I think that it's probably apropos the earlier conversations and Richard's questions. I think, the things that we know is you've got a mortgage market that has got a period of real dislocation, whether it be through the budget changes and then through rates. I think the reason we're quite cautious about drawing too many definitive conclusions is, the budget happens in May. You've got rates that are looking like they're moving up and then they're moving down. We think that a lot of people need to get themselves through their tax year. They want to get through June. They want to spend time with their accountant, spend time with their financial advisor, and then work out their next move. We are seeing signs of different behavior, and we've called out some of those trends that we're seeing.

Speaker #3: I think the things that we know is you've got a mortgage market that has had a period of real dislocation, whether it be through the budget changes and then through rates.

Speaker #3: And I think the reason we're quite cautious about drawing too many definitive conclusions is the budget happens in May. You've got rates that look like they're moving up, and then they're moving down.

Speaker #3: And then we think that a lot of people need to get themselves through their tax year. So they want to get through June, they want to spend time with their accountant and spend time with their financial advisor, and then work out their next move.

Speaker #3: So we are seeing signs of different behavior, and we've called out some of those trends that we're seeing. We are seeing investor down more than owner-occupied.

Nathan Goonan: We are seeing investor down more than owner-occupied. We haven't necessarily seen first-time buyers pick up the slack yet. I think, we would be cautious about drawing too many conclusions at this point in the cycle, and we're really looking forward to being on our feet in November, where we'll have a bigger data set, hopefully a little bit more certainty on rates. We'll have more constructive conversation about what do we think is actually driving what. All we can say is I think we would be more cautiously optimistic than maybe some of the narrative, John, in particular. Everything that we're seeing here would be quite consistent with our economic forecast of about 4.7% mortgage growth in 2027. We knew that we were going to have periods of dislocation as you try and work through that.

Speaker #3: We haven't necessarily seen first home buyers pick up the slack yet, but I think we would be cautious about drawing too many conclusions at this point in the cycle.

Speaker #3: And we're really looking forward to being on our feet in November, where we'll have a bigger data set, hopefully a little bit more certainty on rates, and then we can have a more constructive conversation about what we think is actually driving what.

Speaker #3: Or we can say—I think we would be more cautiously optimistic than maybe some of the narrative, John. In particular, everything that we're seeing here would be quite consistent with our economic forecasts of about 4.7% mortgage growth in '27. And we knew that we were going to have periods of dislocation as you try and work through that.

Speaker #3: But medium-term structural challenges in the housing market still persist, and we think that will ultimately prevail when you get a little bit further down the track.

Nathan Goonan: Medium-term structural challenges in the housing market still persist, and we think that that will ultimately prevail when you get a little bit further down the track.

Speaker #1: Thanks, John. And that brings us to time. So we're available today if you'd like to come through with any further questions. Thank you very much.

Justin McCarthy: Thanks, John. That brings us to time. We're available today if you'd like to come through with any further questions. Thank you very much.

Nathan Goonan: Yeah. Thank you.

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Q3 2026 Westpac Banking Corp Earnings Call

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