Customers are surprising Westpac executives with how well they are coping with higher interest rates and inflation.
Chief executive Peter King told shareholders at the bank's annual general meeting in Brisbane on Thursday that the amount of stress in Westpac's credit card business actually reduced in the past six months.
"That was not an outcome I was expecting," he said. "I would have thought that it would increase."
Mr King said he thought most of the bank's stressed borrowers are mortgage holders, but even delinquencies there are pretty low by historical standards.
"Why is it? Because of responsible lending requirements and the buffers that we had in, so we were including higher interest rate assumptions," he said.
How delinquencies go from here depends on the unemployment rate, Mr King said.
Overall 13,000 customers were in hardship as of September 30, the end of Westpac's financial year, Mr King said.
"Our message to any customer who needs support, is to call us early," he said.
Westpac's stressed exposure number is at 1.26 per cent of assets overall, down from a peak of 3.2 per cent during the global financial crisis, Mr King said. "It's still pretty low."
Westpac chairman John McFarlane, in his final meeting before his retirement, called Westpac's expected losses from bad debts "definitely surprisingly low" and the lowest he had seen since 1997.
The meeting continues, with several Tiwi Islanders asking questions about a loan that Westpac made to Santos, which is working on a $5.7 billion gas project north of Darwin.
Mr McFarlane said privacy requirements prevented them speaking about specific customers, but Westpac's senior executives would meet with the Tiwi Islands people to hear their concerns.
Mr King said that access to cash would remain important as more and more transactions go digital, with Westpac providing access to around 7,000 fee-free ATMs across the country.
Westpac also recently entered into a new 10-year agreement with Australia Post, providing access to more than 3,400 sites.
But with 96 per cent of transactions now digital, "people are just not using the branches", Mr McFarlane said.
