Westpac (ASX:WBC) said its cash earnings fell 2% in the third quarter, despite a 2% increase in operating income.
The company posted cash earnings of $1.55 billion, and net profit of $1.45 billion.
While core earnings before impairment charges and taxes grew 2%, impairment charges and customer costs also rose.
CEO Gail Kelly said the company had faced slowing system credit growth and weaker markets during the quarter, as a result of increasingly shaky consumer sentiment and a increased de-leveraging among larger businesses.
“Notwithstanding these trends, momentum across the group has been sound,” Kelly said.
Lending increased 1% sequentially over the quarter, driven by solid growth in Australian and New Zealand mortgages.
Net interest margins improved to 2.08%, up 4 basis points when excluding the beneficial impact of volatile and one-off items.
Kelly said Westpac's liquid assets grew from $85 billion to $89 billion over the quarter, and its Tier 1 capital ratio improved 12 basis points to 9.65%.
WBC shares fell 4.35% in Tuesday's trading to $20.250.