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Westpac shares dipped after the bank revealed an 11 basis point fall in its net interest margin to 2.06% in the June quarter.
A short time ago, they were down 1.6% to $27.90.
The bank says the decline mostly reflects higher funding costs, including a rise in the Bank Bill Swap Rate (BBSW), and a lower contribution from Westpac’s Treasury.
“The primary source of higher funding costs has been the rise in short term wholesale funding costs as the bank bill swap rate increased sharply since February,” the bank says.
Westpac previously indicated that every 5 basis movement in BBSW impacts the bank’s margins by around 1 basis point.
The BBSW was on average 24 basis points higher in the June quarter than the previous quarter.
This movement reduced the bank’s net interest margin by 5 basis points.
The drop in the bank’s net interest margin: