May 12, 2026, 07:13 AEST—Sydney.
Westpac Banking Corporation reports a slowdown in spending growth across its customer data panel for the first quarter, despite a sharp jump in fuel expenses. Average customer spending ticked up just 0.6% from the previous quarter, or 6.5% on the year. Strip out fuel, and growth was even softer—0.5%, compared to 1.5% in the fourth quarter. Savings balances climbed again, though the pace slipped, and mortgage buffers—notably—began to thin out, Westpac noted.
The Reserve Bank of Australia just raised its cash rate target to 4.35%, a move that’s set to push borrowing costs higher for both businesses and households. Westpac’s economists have shifted their rate hike outlook—they now anticipate two more increases from the RBA in August and September, rather than June and August. The cash rate serves as the main benchmark for setting both loan and savings rates.
Luci Ellis, Westpac’s chief economist, said a rate hike in June is off the table—at least for now. After three straight hikes, the RBA looks likely to hit pause, especially with tensions in the Middle East adding uncertainty. “We adjust the timing of our rates view given the RBA’s language and forecasts,” Ellis noted. Westpac flagged “second-round” inflation as the main threat—rising fuel and energy costs trickling into goods, services, and even home-building. Westpac
Westpac now stands out as the most hawkish among its big-bank peers. According to Mortgage Professional Australia, NAB is tipping one 25-basis-point rate hike in June, then a pause. Commonwealth Bank and ANZ, though, see the cash rate holding steady at 4.35% through the end of 2026. (A basis point is 0.01 percentage points.) Sally Tindall, Canstar’s data insights director, said Westpac’s updated forecast buys borrowers “more time to prepare.” Still, she cautioned, some are running short on “breathing room.” Mortgage Professional
Westpac wasted no time adjusting its rates after the RBA announcement. From May 15, the bank’s variable home loan rates—both for new and existing borrowers—will climb by 0.25% a year. A selection of deposit rates is also heading higher. “The Middle East conflict continues to create global uncertainty and impact inflation,” said Carolyn McCann, chief executive for consumer banking at Westpac. Westpac
Westpac’s profits and capital held up heading into this period, though pressure has been mounting. The bank posted a statutory net profit of A$3.4 billion for the March half, which was 3% higher than the same period last year but slipped 5% from the previous half. The board declared a 77-cent interim dividend. According to Reuters, results lagged analyst expectations, with higher credit-impairment charges and softer treasury income dragging on performance. Chief Executive Anthony Miller called the bank’s provisions “prudent.” Westpac
The outcome isn’t set. A quicker drop in fuel prices or a pullback on cost hikes by businesses might prompt the RBA to hold off longer than Westpac’s forecast. On the flip side, if the conflict sustains high energy costs, borrowers with limited reserves could move from trimming savings to tapping them outright.
At the time this report was filed, Westpac shares were still waiting to enter normal trading in Sydney. The ASX cash market operates its regular session from 10 a.m. to 4 p.m. local time on business days.
