Aug 23 - Westpac Banking Corp (WBC.AX), Australia's second biggest home loan lender, said on Monday its third-quarter cash profit grew 27.3 percent, just short of expectations, due to rising funding costs.
Westpac, which has the highest mortgage rate among Australia's top four banks, said its April-June cash profit was A$1.4 billion ($1.25 billion), up from A$1.1 billion reported a year ago.
Six analysts on average forecast a A$1.5 billion profit.
Australian banks emerged from the global financial crisis stronger than their overseas peers but now face the challenge of weak loan demand, falling fees and rising funding costs.
They are well capitalised though as bad debts are falling and are sitting on record amounts of capital that should position them well to cope with regulatory changes.
Westpac shares have fallen about 10.5 percent so far this year, compared with a 9 percent fall for the benchmark index .AXJO. (Reporting by Narayanan Somasundaram; Editing by Balazs Koranyi)