Westpac notched up $1.8 billion in profits in the June quarter, the banking giant said on Monday, as it also reported ongoing pressure from stiff competition in mortgages and rising staff costs.

The bank on Monday said its operating revenue had been resilient in the three months to June, as it pointed to the ongoing rivalry between banks in the home loan market, where lenders have been competing fiercely on price.

The trading update said the bank’s core net interest margin - which compares funding costs with what the bank charges for loans - was 1.86 per cent, a 4 basis point decline from the March half, reflecting ongoing mortgage competition.

As all banks face rising costs from a higher wages bill and other inflationary pressures, Westpac said its expenses had risen by about 5 per cent compared with the March half, and it pointed to cost-cutting measures.

“Expense growth was driven by inflationary pressures, including higher supplier costs, wages and salaries, and investment in the Group’s technology and customer simplification agenda,” the bank said.

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“The group remains committed to cost discipline with recent cost reset actions driving a full-time equivalent employee reduction of approximately 2 per cent for the second half 2023 to date.”

Westpac rivals Commonwealth Bank and National Australia Bank have this month flagged pressure on their margins, but in more positive news for shareholders, bad debts have generally remained lower than feared.

Westpac said there had been a modest increase in its stressed loans, which rose by 6 basis points to 1.16 per cent of the bank’s total committed exposures.