SYDNEY, March 14, 2026, 10:29 AEDT
Westpac Banking Corp finished Friday up 1.1% at A$40.99, with investors buying back into Australian banks ahead of the Reserve Bank of Australia’s March 17 policy call. 1
This shift is significant—Westpac economists, from the country’s third-largest bank by market value, now tip a pair of 25 basis point hikes in March and May. That would push the benchmark cash rate to 4.35%. A basis point equals one-hundredth of a percentage point. 2
Pressure mounted fast on the central bank. Governor Michele Bullock, on March 3, called the upcoming March meeting “live.” January’s headline inflation hit 3.8%, with the trimmed mean—the RBA’s go-to core measure that weeds out volatile moves—at 3.4%. Both measures landed above the central bank’s 2%-3% target band. 3
When official rates go up, banks can see fatter margins—the difference between interest collected from loans and payouts for funding. That dynamic was on display Friday: Commonwealth Bank picked up 1.26% to A$173.76, National Australia Bank booked a 1.53% gain at A$47.11, and ANZ nudged up 0.49% to A$37.20. This came even as the S&P/ASX 200 index dipped 0.14%. 4
Shares of Westpac remain under their A$42.13 peak from Feb. 13, the day it posted unaudited first-quarter net profit at A$1.9 billion—roughly 5% ahead of what analysts were looking for. The bank leaned on A$12 billion in deposit growth and A$22 billion in new loans to help offset the margin squeeze. 5
Chief Executive Anthony Miller, for his part, said, “We are optimistic on the outlook for the economy and expect demand for both business and household credit to remain resilient.” Over at Citi, analysts labeled the quarter “solid,” highlighting cost discipline, stable asset quality, and a robust capital position. 5
Westpac’s Chief Economist Luci Ellis shifted to a more hawkish stance on March 11, saying the bank is forecasting “25bp hikes in both March and May.” Commonwealth Bank’s Belinda Allen told Reuters, “the balance of probabilities has shifted.” Reuters also noted that three of Australia’s Big Four lenders now predict a rate hike in March. 2
Still, it’s not all upside. Westpac’s core net interest margin—a key gauge of lending returns—slipped by 3 basis points in the first quarter, squeezed by tough competition. Deutsche Bank economist Phil O’Donaghoe told Reuters that if tensions in the Middle East ramp up, the RBA could opt to hold off. Shares at A$40.99 haven’t climbed back to their February high of A$42.13, and might face more pressure if rates stay put on March 17. 5
