Westpac chief executive Peter King is leaving the bank with a slight drop in profits but with an encouraging belief that Australia’s cost of living crisis could have reached its peak.

Mr King, who will step down by the end of 2024 after five years at the helm of the bank, said on Monday that Westpac’s relief packages for struggling property borrowers had declined since June amid an improving outlook economics in anticipation of expected reductions in interest rates in 2024. early 2025.

“Consumer confidence has reached its highest level in two and a half years, the labor market is holding up well and inflation is close to its target,” he said.

“However, we recognize that some customers face difficult choices. »

Mr King said Westpac had helped 47,500 borrowers over the year with mainly short-term relief packages, including loan deferrals, but was now seeing customer repayment pressures seem subside.

“We actually saw a spike in June, and they’re starting to come down,” he said after reporting a 3 per cent fall in Westpac’s annual profit to $7 billion.

“That tells me that a lot of people have gotten used to these higher interest rate levels.”

He also said many customers had been building reserves, both by getting ahead of their mortgage payments and saving more.

“There are signs that things will be a little more positive” for households next year, with Mr King citing a series of rate cuts expected from February and wider economic improvement.