Why is Westpac (ASX:WBC) falling today?
Westpac (ASX:WBC) Warns on Bad Debts — Iran War Takes Its Toll
What Happened Today
Westpac shares fell more than 4% to $40.75 this morning after the bank warned that the Iran war is starting to hurt its business. It was a bigger fall than the other “Big Four” major banks who also struggled on the day.
The Two Problems Westpac Flagged:
- Rising bad debts Westpac is setting aside more money to cover loans that may not be repaid. The customers most at risk are businesses with big fuel bills — think transport companies, manufacturers, and farmers — who are being hammered by diesel prices above $2.60 a litre.
- Weaker trading revenues – The wild swings in interest rates since the Iran war began have hurt Westpac’s markets division, which trades bonds and other financial products.
How Bad Is It?
Analysts expect to cut their profit forecasts for Westpac by a small amount. The bank’s official half-year results are due on 5 May 2026, which is when we’ll get the full picture. What the Banks Are Doing to Help the in the local economy:
Australian banks are:
- Fast-tracking emergency loans for struggling businesses.
- Offering repayment holidays for distressed customers.
- Sharing data with the federal government so support can be directed where it’s needed most – Treasurer Jim Chalmers and the Banking Association confirmed the response will be hands-on.
The Inflation Warning You Shouldn’t Miss
Westpac’s chief economist Luci Ellis made a critical point last week — even if a ceasefire is reached in the Middle East, inflation will not quickly come down. That means the RBA may keep rates higher for longer, which adds more pressure on households and businesses already doing it tough.
We remain bullish on the ASX banks, but this news could weigh on the sector, and consumer related names, through until May.
What to Watch
- 5 May — Westpac half-year results. Will bad debt provisions be even higher?
- Other big banks — Will CBA, NAB and ANZ flag similar problems?
- Fuel prices — If the Iran ceasefire holds and oil falls, the pressure on business borrowers’ eases
- RBA — Rate cut hopes may be pushed further out given sticky inflation
We continue to like the banks and Westpac, but today’s news is likely to weigh on the sector for a few weeks at the very least.
