Westpac chief executive Peter King, in reporting the ASX-listed behemoth’s half-year results on Monday morning, said there had been an “uptick” in stress on its loan books as Australians struggled through higher interest rates and cost-of-living pressures.

Thirty-day plus delinquencies from March 2023 to March this year rose from 139 basis points to 181, while customers in hardship had moved from 0.5 per cent of the bank’s mortgage portfolio to 1.05 per cent.

A hardship balance means the bank offers a customer a reduction or deferral of repayments for a short period of time.

Mr King said the bank had about 18,000 assistance packages on its books for struggling customers, up from 11,000 pre-Covid.

“While households have displayed resilience, we know some customers are doing it tough,” he said.

Mr King, speaking with investors, said there were “lots of options available” for struggling homeowners, from debt restructure plans to payment pauses.

“I encourage customers to call us if they need help,” he said.

“Call us early would be my key message.”

Chief financial officer Michael Rowland also warned that arrears were “likely to rise further” but said the bank’s “credit quality” remained sound.

Westpac has about 21 per cent of Australia’s mortgage market.

And in a cautious tone, Mr King delivered a fresh warning to homeowners, warning interest rates would likely stay “higher for longer” as the Reserve Bank navigated sticky inflation and rising geopolitical uncertainty.

He said the bank’s economists were forecasting a rate cut in the latter half of the year but he expected it would be “more 2025”.

“Our economics team is forecasting a cut in the fourth quarter. My personal view is I think that’s a bit too early,” he said, citing continued demand in the economy for infrastructure and housing.

“We believe the economy is on track for a soft landing and, if this happens, this will be good news for many Australians.

“However, this scenario is not certain.

“While inflation has fallen, getting it down to target range is proving difficult globally and here in Australia.

“It is likely interest rates will stay higher for longer.”

A soft landing refers to the outcome where central banks raise interest rates to tame inflation without tipping economies into recession.

Westpac, one of Australia’s “big four” banks alongside NAB, Commonwealth Bank and ANZ, reported its results for the six months to March 31, 2024, with the bank delivering a special dividend of 15c a share fully franked and a $1bn lift in its share buyback program to $2.5bn.

The giant recorded a 16 per cent slide in half-year profits to $3.34bn, with Mr King warning of a “slowing economy and competitive banking sector”.

The $3.34bn profit figure marks a 16 per cent fall from the corresponding period in the 2023 financial year but a 5 per cent rise from the immediate six months prior.

Net interest margin, a key measure of bank profitability, was 1.89 per cent, a fall of five basis points from the prior period.

NIM, expressed as a percentage, calculates the difference between what a bank earns from lending out money from what it pays out in deposits.

The bank earnt revenues of $10.81bn for the six months, a 1 per cent decline from the first half of FY23.

Mr King said the bank had “managed growth and margins in a disciplined way amid a slowing economy and competitive banking sector” throughout the half year.

“We grew our major Australian segments in a disciplined way with mortgages and deposits up 5 per cent and business lending up 9 per cent over the year,” he said.

“The impact of competition on mortgage margins moderated this half.”

The bank has $650.9bn in total deposits, a 4 per cent increase from the first half of FY23, and $784.8bn in total loans, a 5 per cent increase.

Mr King delivered a positive view of Australia’s immediate economic outlook.

“Overall, the Australian economy is proving resilient,” he said.

“While economic growth has slowed, unemployment remains low by historical measures.

But he warned of “potential challenges” to the global economy.

“We are closely watching the ongoing economic risk from geopolitical conflict and uncertainty playing out in the Middle East and Europe.”

Shares in the bank lifted 2.63 per cent in morning trading to $27.12 a share.

Saxo Asia Pacific Senior Sales Trader Junvum Kim said the bank’s announcement of the special dividend and buyback expansion had been “warmly received” by the market and would likely bolster investor confidence.

“Yet the competitive landscape in the mortgage market continues to be a thorn in Westpac’s side for the core net interest margin, which is struggling to rise above the 2 per cent mark,” he said.

Westpac is the second of the big four to report half-year results this month.

Last week, NAB reported a 12 per cent fall in profits to $3.49bn.