Despite rising cost of living challenges, Westpac has announced a significant decline in the number of customers seeking hardship payments, as mortgage holders gradually adjust to higher interest rates. According to outgoing CEO Peter King, the number of customers on hardship provisions has dropped from nearly 20,000 in June to 17,500 by the end of November 2024.
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While the bank acknowledges that some customers are still struggling with financial pressures, King emphasized that the situation is improving as Australians adapt to the current economic climate.
“Supporting customers facing hardship is a key focus of our sustainability strategy,” King said during the bank’s annual general meeting.
Hardship Packages and Financial Support
Throughout the year, Westpac provided 47,500 hardship and disaster support packages to both customers and businesses, helping them regain financial stability. However, by the start of the new financial year, around 19,000 accounts remained on hardship.
Westpac’s reports suggest that even if the Reserve Bank of Australia (RBA) continues to maintain the official cash rate of 4.35% into 2026, it is unlikely to significantly impact the majority of mortgage holders. Most customers are managing to stay ahead, with offset balances increasing by 10% to $60 billion, reflecting an overall trend of resilience among homeowners.
Impact of Interest Rates on Borrowers
The RBA’s current cash rate has now been at 4.35% for over a year, continuing to place financial pressure on homeowners. Despite this, Peter King stated that most borrowers are managing their mortgages effectively, with fewer seeking assistance compared to earlier periods of financial stress.
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A Look at Westpac’s Future Outlook
Westpac’s outlook for 2024 remains cautiously optimistic, with both CEO Peter King and Chairman Steven Gregg predicting a moderate economic recovery. The bank is focused on simplifying operations and improving risk management, including through the UNITE program, which aims to prepare Westpac for future challenges.
Concerns Over Environmental and Labor Practices
Despite strong financial results, Westpac faced shareholder backlash over its funding of companies linked to climate change, particularly those involved in coal, oil, and gas production.
Chairman Gregg addressed these concerns, affirming that Westpac is committed to achieving net-zero emissions by 2050 and taking steps to reduce its environmental footprint.
In addition, the bank has come under fire for offshoring jobs, with 132 positions cut in various divisions, including risk management, operations, and sales. Unions have raised concerns over these job cuts, especially as many roles are being moved overseas to India and the Philippines.
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Looking Ahead: The Road to Recovery
While Westpac has faced challenges in the form of high-interest rates and public scrutiny over its environmental and labor practices, it remains well-positioned for a moderate recovery in the coming year. The key for the bank moving forward will be balancing financial stability with a commitment to addressing social and environmental issues.
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