Westpac becomes latest bank to reveal impact of Middle East war on hard-pressed customers
Tuesday, 5 May 2026
Westpac reported an after-tax profit of $545 million for the six months to the end of March, up 4% from $526m in the same period last year.
The net profit did, however, represent a 19% drop on its profit for the preceding six month period which ended on September 30.
Westpac chief executive Catherine McGrath said that was due to setting aside money for impaired loans in the face of worsening economic conditions and lower margins on home loans.
The bank increased total lending by 6% and deposits by 3% compared with the same period last year.
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However, research conducted by the bank to release at the same time as its results indicated just how household spending habits had changed as a result of high fuel prices as a result of the war in the Middle East.
The nationally representative survey of 530 people, conducted on research platform Ideally late last week, found 84% of people had adjusted their behaviour in response to the conflict.
The survey found 43% of people had cut back on non-essential spending, 51% were now driving less, and 35% said they had changed how they shopped for food.
Of those who had made changes to their spending, a quarter felt it might not be enough to enable them to cope with higher costs.
One bright spot in customers’ finances was that Westpac had “actively encouraged” fixed home loan customers to continue repaying the same regular amount on their loan even as their minimum required repayments fell.
“As a result, nearly half our fixed home loan customers are paying above their minimum, compared to a third when interest rates peaked in 2024,” said McGrath
But, she said: “we know that the strain on many households will increase the longer the disruptions caused by the conflict drag on, and we’re monitoring this closely.”
McGrath’s statements during the profit announcement broadly mirrored the messages that the chief executives of ANZ and BNZ made in recent days.
“Before the conflict in the Middle East, New Zealand’s economy had been slowly gathering momentum. While the conflict is set to push GDP growth backwards in the near term, we think the economy will pick up again when there is a resolution to the conflict and oil prices then gradually ease,” she said.
“Our economists now expect GDP to shrink by 0.4% in the June quarter, with unemployment and inflation to peak at 5.6% and 4.5% respectively in the middle part of this year,” McGrath said.
She said: “We know the last couple of months have been unsettling for households and businesses exposed to higher costs, especially in the transport, manufacturing and agriculture sector, as well as those who rely on cars.”
Westpac was keen to stress some of the efforts it has been making to respond to the petrol crisis, and to policy imperatives.
McGrath said: “We’re proactively contacting businesses most exposed to higher fuel costs and are helping them manage the impact. Longer term, we’ve provided more than $5b of discounted lending since 2023 through our Sustainable Business and Sustainable Farm Loans to help businesses make a range of improvements, including to their energy resilience.”
And, she said the bank had been “rolling out” community banking vans to 15 towns and suburbs across Northland, Southland and Canterbury, and had further developed its security systems to reduce customer losses to fraud and scams by 15% compared to the same time last year.
Westpac is the third of the big banks to reveal half-year profits.
On Friday, ANZ said it’s after-tax profit was marginally down on the equivalent six-month period last year, and BNZ posted a large profit drop, but that was largely due to writing down the value of its software, a move prompted by the rapid development of artificial intelligence.