Westpac has reported a flat full-year profit of $8.09 billion as customer compensation and legal costs reined in performance.

Cash earnings – Westpac’s preferred measure of profitability – for the 12 months to September 30 barely moved from the $8.06 billion reported a year ago.

But it dropped 10 per cent between the first and second halves, pointing to deteriorating conditions and increasing challenges as the lender set aside $281 million for customer remediation following revelations made at the Banking Royal Commission.

Westpac CEO Brian Hartzer tells Ross Greenwood “we have to balance up a lot of costs”.

But he maintains the bank’s credit quality is “very, very strong.”

As for a “credit squeeze” in Australia, Mr Hartzer says the bank has “plenty of funding to support our customers’ needs for credit”.

“What I think we have seen is that over the last several years…we did tighten up some of the credit criteria.”

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