Westpac Group chief executive officer Gail Kelly said a highlight of these results is the strong performance of the firm’s two largest divisions, Westpac Retail & Business Banking and Westpac Institutional Bank.

"In Westpac Retail & Business Banking, our investment in the front line through Westpac Local is clearly delivering; in Westpac Institutional Bank, as Australia’s leading institutional bank, we are well placed to assist customers in these volatile times," Kelly added.

For the latest quarter period, net interest income increased $259m to $6.2bn ($6.4bn), with a 6% rise in average interest earning assets partially offset by a decline in margins.

Group net interest margin stood at 2.17% , down by 4 basis points from the first half of last year and a decrease of 6 basis points on Second Half 2011, mainly due to the decline was due to the repricing of lending being insufficient to offset higher funding costs.