While Westpac missed the initial bad debt shocks from the credit crunch, the lending giant's exposure to commercial property is now starting to hurt its bottom line.

Westpac's shares rallied as much as 3% in the morning trading - faring better than its rival banks - after its first-half profit came broadly in line with expectations. A cut to its dividend smaller than those rivals also underscored the health of its balance sheet.

Westpac chief executive Gail Kelly describes the bank's first-half performance as sound and says the bank remains in good shape in the face of a tough operating environment.

The Age