(Reuters) – Australia’s Westpac Banking Corp on Monday posted over a 12% drop in first-half cash earnings, as its margins continued to be squeezed by stiff competition in mortgage lending amid record low interest rates and certain impairment charges.

Australia’s “Big Four” banks enjoyed a boom in home lending helped by low rates and a pandemic-fuelled shift to remote working that buoyed property markets. But their margins have been hit by competition and by borrowers moving to fixed-rate loans.

Westpac, which is also emerging from a costly turnaround to fix outdated software and convoluted procedures, said net interest margin – a key profitability indicator – fell 15 basis points to 1.91% in the first half.

It recorded an impairment charge of A$139 million, as the bank set aside provisions for bad debts amid weather-related risks in Australia as well as the broader global uncertainties.

The country’s third-largest bank reported cash earnings of A$3.10 billion ($2.19 billion) for the six months ended March 31, compared with A$3.54 billion reported last year, but beat Visible Alpha consensus forecast of A$2.83 billion.

Last week, its peers National Australian Bank and Australia and New Zealand Banking Group had forecast that their margins would benefit after the country’s central bank hiked rates and signalled more to come.

Westpac declared a dividend of 61 Australian cents per share, compared with 58 Australian cents last year.

($1 = 1.4154 Australian dollars)

(Reporting by Savyata Mishra in Bengaluru; Editing by Leslie Adler and Diane Craft)