Outgoing Westpac boss Peter King believes interest rate relief in 2025 will further ease pressure on borrowers as fewer mortgage customers apply for financial hardship.
The bank posted a $7 billion full-year profit, in line with expectations, but down three per cent on the previous year amid competitive pressure.
Mr King said some mortgage-holders were still under pressure from higher interest rates and inflation, but those seeking hardship support peaked in June and had since started trending down.
More borrowers had started paying ahead and putting extra into their offset accounts, he said.
"The vast bulk of the book is doing well, but that's not everyone, I acknowledge that, and that's why I say call us early if you need help," he said on the results call on Monday.
The majority of the tailored hardship packages were for just three months, which to Mr King indicated most households needed time to adjust to job loss, illness or other shocks but were broadly able to withstand higher interest rates.
"Our economics team is forecasting an interest rate cut of 25 basis points in February. Hopefully they're right, because that will be good to give people a little bit of relief," he said.
Westpac announced a $1 billion increase in its share buyback program and a final dividend of 76c a share, up from 72c.
The group's net interest margin, the difference between interest income from loans and interest paid on deposits and a key gauge of banking profitability, reached 1.97 per cent in the second half, up eight basis points.
Expenses rose seven per cent to $10.9 billion, reflecting spending on a major business and technology simplification program as well as inflationary pressures.
Mr King said the Australian economy had experienced an extended period of below-trend growth but the outlook was improving.
Economic growth was expected to pick up from 1.5 per cent in 2024 to 2.5 per cent in 2025, based on the bank's predictions.
He said these trends were expected to translate into key markets in 2025, with Westpac anticipating credit growth of about five per cent in housing and seven per cent in business.
Mr King will hand the top job to business banking boss Anthony Miller on December 16.
Westpac's shares initially fell on Monday, but finished 0.9 per cent higher, at $32.40.
The other three major Australian banks were also higher - NAB gained 1.3 per cent, CBA 1.6 per cent and ANZ 0.6 per cent.
