WESTPAC Banking’s profit edged higher as pressure on margins eased and mortgage lending grew faster than the wider industry, offsetting a fragile outlook for the nation’s economy.

Unaudited net profit came in at A$1.8 billion (US$1.226 billion) in the three months to Jun 30, according to a statement.

Australia’s largest banks are contending with expectations that interest rates will begin to fall before the end of this year, even as many consumers and businesses curb spending.

“The cost of living and high interest rates remain a challenge for some customers while many businesses are facing cost pressures and experiencing lower demand,” chief executive officer Peter King said.