Analyst Note
| Nathan Zaia |Westpac’s third-quarter 2022 update was devoid of any income or expense details, instead focusing on capital, credit quality, and funding. Given results from peers, we think it is fair to assume margins would have neared a bottom during the quarter, with cash rate increases in July and August now passed on in full to borrowers. Customer deposits as a percentage of loans declined 40 basis points to 83.1% in the quarter, and APRA data indicates Westpac has grown deposits below market. We suspect Westpac has simply not competed as aggressively as some smaller lenders for term deposits to help protect margins. In the June quarter, Westpac’s household deposits grew 0.3%, compared with 1.1% across all banks.