Westpac’s Third-Quarter Update Prepares the Market for Margin Pressure, but the Fix Is Underway

It may not sound like much of an achievement, but Westpac maintaining its market share of home and business loans in the third quarter supports our thesis. As the nation’s second largest lender, we expect funding and operating cost advantages, which underpin our wide moat rating, arms the bank with the resources necessary to profitably grow its loan book over the medium term. Investments to make loan approval times faster, have a leading mobile offering, and even pulling the lever on price, will all contribute. Sharp pricing is being used to get brokers back on side now, and while it hurts margins, we are encouraged volumes in the retail and broker channels have both turned a corner.