{"id":651095,"date":"2026-05-05T12:33:08","date_gmt":"2026-05-05T12:33:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/651095\/"},"modified":"2026-05-05T12:33:08","modified_gmt":"2026-05-05T12:33:08","slug":"bank-raises-buffers-for-bad-loans-as-it-braces-for-economy-slowdown","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/651095\/","title":{"rendered":"Bank raises buffers for bad loans as it braces for economy slowdown"},"content":{"rendered":"

\"ClancySave<\/p>\n

You have reached your maximum number of saved items.<\/p>\n

Remove items from your saved list<\/a> to add more.<\/p>\n

AAA<\/p>\n

Banking giant Westpac has raised its buffers for soured loans as it prepares for a weakening in the economy due to the Middle East war, even as its latest results showed fewer borrowers were struggling with repayments.<\/p>\n

The country\u2019s second-largest mortgage lender said on Tuesday that it was increasing its provisions for bad debts, a sign the bank is preparing for a softer economy and disruption from the energy crisis, as it notched up $3.4 billion in first-half profits.<\/p>\n

\"WestpacWestpac CEO Anthony Miller said the bank was being prudent in raising its provisions.Max Mason-Hubers<\/p>\n

The results included about $200 million in extra provisions for bad debts compared with the previous half, as the lender sought to protect its balance sheet from potential losses caused by pain inflicted on energy-intensive sectors.<\/p>\n

As the Reserve Bank on Tuesday jacked up interest rates again<\/a>, Westpac reaffirmed it expects more pain for borrowers, tipping two more rate increases, which would take the cash rate to 4.85 per cent.<\/p>\n

Chief executive Anthony Miller said he thought the economy would avoid a recession, and his bigger concern was that business investment decisions would be put on hold because of uncertainty.<\/p>\n

Related Article\"The<\/a><\/p>\n

\u201cAt the moment we don\u2019t forecast a recession, but people who talk with absolute certainty today in this environment, I think, are misinformed because it\u2019s an unusual environment in which we\u2019re in, and there\u2019s no doubt that there\u2019s a lot of competing forces here,\u201d he said.<\/p>\n

Miller said that while higher interest rates were slowing the economy down, price rises caused by the energy crisis could also dampen spending, which could mean fewer rate rises were needed.<\/p>\n

\u201cI do think the uncertainty is the bigger issue here because the thing that I\u2019m more worried about … is that businesses and investment decisions are put on hold,\u201d he said.<\/p>\n

Miller said that although the latest results showed the number of customers in financial distress had declined, the bank was being prudent in raising its provisions.<\/p>\n

Westpac said its deposits and loans grew more than 7 per cent over the year, with its total loans rising to $890.3 billion as customer deposits hit $745.2 billion. Stressed loans fell 12 basis points from the September half, to 1.16 per cent of total exposures.<\/p>\n

Related Article\"Michele<\/a><\/p>\n

As well as forecasting higher interest rates, the bank is tipping an increase in unemployment to 5 per cent by early next year, compared with 4.3 per cent currently.<\/p>\n

It is also tipping a slowdown in the property market. Westpac\u2019s economists are forecasting 1 per cent growth in house prices in Sydney and Melbourne this year, and 3 per cent across capital cities on average.<\/p>\n

Miller noted the slowdown in auction clearance rates, and said people\u2019s expectations of prices had also fallen, but added this was partly what the RBA would want to achieve by raising interest rates. He said the full impacts of the energy crisis and the rate increases were yet to flow through to borrowers.<\/p>\n

\u201cIt\u2019s early days in many respects because the second interest rate rise that occurred in the first week of March is only now being implemented and landing in terms of increased rates for borrowers,\u201d Miller said. \u201cSo there\u2019s still quite a lot to play out for the consumer at the moment.\u201d<\/p>\n

The bank declared an interim dividend of 77\u00a2 a share, the same as for the September half.<\/p>\n

National Australia Bank and ANZ Bank have also recently topped up their provisions for bad debts and cautioned about the economic risks of the energy shock, though bankers say the crisis has not yet caused notable changes in customers\u2019 behaviour or their financial health.<\/p>\n

On Monday, NAB, the country\u2019s biggest lender to small business, said it expected Australia would avoid recession<\/a>, but some industries were facing particular pressure from the energy crunch, including transport and logistics firms.<\/p>\n

NAB chief Andrew Irvine said it was still too early to know the economic fallout from the war, while underlining concerns that household and business customers had raised about soaring fuel costs, disruptions to supply, higher inflation and rising interest rates.<\/p>\n

Related Article\"Banks<\/a><\/p>\n

\u201cWhile conditions continue to be good, confidence has really kind of plummeted, and that\u2019s a worry,\u201d Irvine said as NAB reported half-year cash profits of $2.6 billion.<\/p>\n

\u201cOur best forecast is that we will see a reduction in business activity over the second half of the year and to the extent there are customers that are doing it tough, we\u2019ll be there for them.\u201d<\/p>\n

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning<\/a>.<\/p>\n

Save<\/p>\n

You have reached your maximum number of saved items.<\/p>\n

Remove items from your saved list<\/a> to add more.<\/p>\n

\"ClancyClancy Yeates<\/a> is deputy business editor. He has covered banking and financial services, and was previously national business correspondent in the Canberra bureau.Connect via X<\/a> or email<\/a>.From our partners<\/p>\n","protected":false},"excerpt":{"rendered":"Save You have reached your maximum number of saved items. Remove items from your saved list to add…\n","protected":false},"author":2,"featured_media":651096,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":["post-651095","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/651095","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=651095"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/651095\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/651096"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=651095"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=651095"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=651095"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}