But the bank also warned of lower credit growth and said intense competition was expected to negatively impact the lending sector and Westpac’s margins.

But it said borrowers were mostly ahead on their mortgage repayments, offset accounts were not yet significantly changed and mortgage delinquency was low.

It said it was focused on how long interest rates remained at the current level and what that meant for borrowers and discretionary spending.

Shareholders would receive a 70 cents a share dividend, fully franked, an increase of 15 per cent on the first half of last year.

Chief executive Peter King said the bank was entering a new strategic phase and priorities were shifting.

He said the bank was receiving more calls from customers to discuss their financial position.

“We expect to see more stress in the period ahead, particularly in small business,” King said.

“While the Australian economy remains resilient with low unemployment and high population growth it is expected to slow over the remainder of 2023. Credit growth _ both housing and business _ will ease.

“Westpac enters this environment from a position of strength. We’ve set the balance sheet for the tougher outlook.”

The Westpac result follows increased profits for Macquarie and ANZ and NAB posting high half and full-year profits.

Within its lending segments, consumer profit was up 7 per cent t $1.7 billion. Business lending profit jumped 256 per cent to $851 million and its institutional bank profit increased 88 per cent to $574 million.

Profit at its New Zealand business fell 33 per cent to $NZ426 million.