WBC profit at $5b-plus, rates yet to bite

But revenue was down two per cent to $19.9b and cash earnings - the banking industry's preferred measure of operational strength because it strips out volatile and one-off items - fell one per cent to $5.3b

The cash earnings beat consensus estimates by 3.7 per cent, said E&P Financials banking analyst Azib Khan in a note. 

But Westpac shares were down 3.0 per cent to $23.425 at 10.40am AEDT, on a day when CBA was up slightly and NAB was down slightly, although ANZ had fallen even more, by 3.5 per cent. 

"We've delivered a solid financial result and made steady progress on our strategic priorities," Westpac chief executive Peter King said

"We've built positive momentum and positioned the company for the future."

Westpac said it had returned to growth in its key segments of Australian mortgages and business lending.

"We are charting our way through a period of high inflation and rapid increases in interest rates," Mr King said.

But the bank was yet to see an increase in hardship or stressed assets.

"Many customers built up savings during the past two years and 68 per cent remain ahead on their mortgage repayments," Mr King said.

"However, it is inevitable that the impact of higher rates will be felt, including when borrowers' low fixed-rate loans are rolled over."

While consumer spending remains resilient, Westpac expects the "heat" to come out of the economy as higher rates bite.

"Small business is one sector we are watching closely as consumption slows," Mr King said.

Westpac also noted that it expects housing prices to continue to fall in fiscal 2023, which would likely see an easing in credit growth.

Still, the economy remains robust and the bank said it was well-positioned to handle the road ahead. 

"Our own portfolio is in good shape going into 2023," Mr King said.

Mr King said Westpac's mortgage business grew slower than its peers over the year, but gained momentum in the second-half. 

He was pleased with the roll-out of the Westpac app, which offers improved self-serve capabilities and a less than two-second log-on speed.

Westpac said it was continuing its migration to digital, with the number of Westpac's Australian branches down 14 per cent over the past two years, to 732, while the number of Westpac ATMs is down 16 per cent to 1,071 over the same period.

Meanwhile, Westpac's number of digitally active customers is up five per cent to 5.48 million, and its digital transactions are up 13 per cent to 356m.

Westpac will pay a final dividend of 64 cents per share, taking the full year payout to $1.25,