The bank said it was making progress in its transformation and improving its culture and risk management and revealed it had paid out $1 billion in remediation.

But it added the bank was not performing as it should be.

Its cash earnings in consumer banking were $3.08 billion and were boosted by an impairment benefit of $125 million. Mortgages increased by $19 billion, or 5 percent, but margins decreased because of competition in attracting and retaining customers.

In business banking, it earnings were up 144 per cent, once again because of impairment benefits of $484 million. Excluding notable items Westpac said its net interest income was down $416 million.

Its institutional bank suffered cash earnings losses of $670 million because of write downs on assets.

Chief executive Peter King said he was confident the Australian economy would rebound in the next year, despite some uncertainty in the outlook.

“Consumer spending will likely increase significantly as states re-open and pent up demand is released, particularly supported by consumer optimism and sizeable savings,” he said.

“We expected the Australian economy to expand by 7.4 per cent in 2022, with credit growth expanding by 6.8 per cent. Demand for housing is likely to remain elevated by home price increases should moderate to 8 per cent next year.

“We have made considerable progress in improving our mortgage and business banking banking performance, driven by streamlining of lending processes to create a better customer experience.”

Apart from its buyback, Westpac declared a final, full franked dividend of 60 cents a share bringing the yearly total to $1.18.