Westpac announces significant pre-tax restructuring charge
Westpac, Australia’s leading banking and financial services institution, has announced a substantial pre-tax restructuring charge of A$273m ($177m) for the second half (H2) of the fiscal year 2025 (FY25). This restructuring charge is related to the targeted productivity initiatives under its Fit for Growth programme, designed to streamline operations and enhance efficiency.
Fit for Growth Programme
Despite the significant restructuring charge, Westpac stated that its Fit for Growth programme has delivered modest benefits within this financial year. The overall productivity gains made are expected to cover the programme’s costs, signifying a positive return on investment. The bank also anticipates the programme to yield further benefits over the subsequent two financial years, reinforcing the long-term profitability of this initiative.
Financial Implications
The restructuring expense associated with the Fit for Growth programme will not be classified as a notable item in Westpac’s financial statements. Instead, the expense will be recorded as an operating cost over the six-month period. This accounting practice ensures that the expense does not impact the group’s net profit after tax or alter the composition of line items. The bank also revealed that its reported net profit after tax for FY25 will be reduced by A$56m due to notable items associated solely with hedging, which are expected to reverse over time. This represents a decrease compared to a A$123m hit in the previous fiscal year.
Upcoming Financial Results Release
Westpac is scheduled to release its full-year financial results on 3 November 2025, providing stakeholders with a comprehensive understanding of the bank’s financial performance for the fiscal year. This release will offer further insights into the impact of the restructuring charge and the productivity gains from the Fit for Growth programme.
Regulatory Developments
In a significant regulatory development, the Australian Prudential Regulation Authority (APRA) has stated that Westpac has fulfilled the requirements of a multi-year risk transformation programme. Consequently, APRA will withdraw the additional A$500m capital add-on applied to the bank. This move will boost Westpac’s common equity tier 1 (CET1) capital ratio by an estimated 17 basis points, indicating a reduction in risk-weighted assets amounting to A$6.25bn.
After an APRA investigation in 2020, Westpac entered into a Court-Enforceable Undertaking (CEU) with APRA in December of the same year, committing to fix prudential weaknesses in its culture, governance, and accountability and to address their root causes. The bank launched the Customer Outcomes and Risk Excellence (CORE) Program in response and appointed an independent reviewer to oversee its progress.
Westpac’s Response
Westpac CEO Anthony Miller responded positively to the removal of the capital surcharge, stating: “Risk management is one of our five priorities and this year we’ve been focused on embedding the improvement to our risk culture. We can never forget the errors of the past and the importance of the work we have done over the past six years.” He further emphasised that the positive changes in managing risk must be maintained and continually strengthened.
Future Plans
As part of its future strategy, Westpac revealed plans in September 2025 to eliminate 200 teller roles throughout its branch network. The bank intends to reallocate these resources to bolster its home and business lending operations, reflecting a strategic shift towards core lending activities. This move also signifies the bank’s commitment to continually adapt and evolve in response to changing customer needs and market conditions.
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