Westpac Banking Corp.

The rating outlook on WBC is stable. Australia's economic prospects over the next two years are sound. This is despite subdued GDP growth due to elevated interest rates and the slowing economies of major trade partners. We forecast unemployment in Australia will increase somewhat but remain low in a historical context. We expect modest growth in house prices over the period. Strong immigration-driven population growth along with limited new housing supply should continue to support house prices. Consequently, Westpac should maintain sound earnings and its credit losses should remain low, at about 15 basis points of customer loans. We project our RAC ratio for Westpac to remain strong at 11.5%-12.1% over the next two years. The rating on Westpac has

...Westpac Banking Corp.'s (Westpac) strong market position and focus on low-risk lending in Australia and New Zealand will continue to support its earnings. The bank focuses on retail and commercial banking. Despite elevated consumer prices and interest rates, we see a sound outlook for the economies of both countries. Westpac's capitalization will remain a credit strength. We project our risk-adjusted capital (RAC) ratio for the bank will fall to 11.5%-12.1% over the next two years. As of March 31, 2024, our RAC ratio for Westpac was 13.2%. Credit losses should remain low and close to pre-pandemic levels over the next two years. We believe low unemployment levels, modest economic growth, and a change in spending patterns in Australia and New Zealand will shield most borrowers against elevated interest burdens and consumer prices....

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