Westpac Banking Corporation, Australia's second-largest lender, booked a $6.8 billion annual profit for the year to September, the bank announced Monday — but a shrinking lending margin and a chorus of "soft" verdicts from analysts took some of the shine off the number, just a day before the country's central bank is widely expected to raise interest rates again.

In its official FY26 results announcement, Westpac reported statutory net profit of $6.8 billion, down 1% from the prior year, while cash earnings that strip out one-off items held flat at $7.0 billion — slightly ahead of the roughly $6.96 billion analysts had penciled in. The board declared a fully franked final dividend of 77 cents a share, lifting the full-year payout to $1.54, up 1% on last year.

A "Soft" Scorecard

CEO Anthony Miller framed the numbers as evidence of steady progress through a bumpy year for the bank, which has been mid-stream on a multiyear technology overhaul.

"This year we've built momentum across the bank, delivering a solid result while investing in Westpac's transformation," Miller said in the release.

Not everyone was convinced. As ABC News reported, JPMorgan analyst Andrew Triggs called the result "soft," flagging a "very weak" core net interest margin in the fourth quarter that dragged the bank's overall margin down 7 basis points to 1.87% — narrower than the 1.89% Street had expected. Return on equity slipped to 9.6%. Triggs said he now expects small downward revisions to earnings-per-share forecasts. UBS analyst John Storey was milder, noting that cost discipline and lower-than-feared bad-debt charges helped offset weaker second-half revenue, though he warned competitive pressure on margins will likely persist into next year.

Investors shrugged off the analyst caution: Westpac shares closed up roughly 1% on Monday, outperforming its big-bank rivals and the broader market, which was dragged lower by a sell-off in mining stocks.

The timing is pointed. Westpac's result landed less than 24 hours before the Reserve Bank of Australia's Tuesday rate decision, where markets are overwhelmingly pricing in a quarter-point hike that would push the cash rate to 4.85% from 4.60% — the latest in a run of increases aimed at taming inflation that has refused to fully cool. The decision also comes bundled with an updated Statement on Monetary Policy, giving the central bank a fresh platform to revise its growth and jobs outlook.

That outlook is already darkening at the country's other big lenders. Economists at National Australia Bank cut their 2027 GDP growth forecast to just 1.0% and lifted their expected unemployment rate to 5.4% by the end of 2027, while Commonwealth Bank economists trimmed their own growth call to 1% by mid-2027 — down from 1.8% — and don't see the economy returning to its roughly 2.9% trend pace until the second half of 2028. Both banks now expect at least one more rate hike after Tuesday's.

For Westpac, the saving grace is capital: its common equity tier-1 ratio sat at 12.5% at year-end, roughly $2.9 billion above the level regulators require in normal conditions, cushioning the bank even as margins get squeezed from both competition and a hawkish rate backdrop.