Westpac's Q4 profit and mortgage market share shrink

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Westpac New Zealand’s fourth quarter net profit shrank slightly as its provisions for bad debts rose and its share of the mortgage market also dipped.

Wednesday, December 24th 2008, 5:00AM

by Jenny Ruth

Westpac’s latest general disclosure statement shows net profit for the three months ended September was $97 million compared with $98 million in the same three months a year earlier, although net profit for the year ended September was up 25.3% to $559 million.

The bank’s charge against profit for impaired loans rose to $170 million for the year ended September from $97 million for the nine months ended June and compared with $85 million for the year ended September 2007.

Charges against profit for impaired residential mortgages nearly doubled to $33 million for the latest year from $18 million the previous year.

Total impairment provisions jumped to $322 million from $220 million the previous year, with residential mortgages accounting for $54 million, up from $35 million, but still remaining a fraction of the total mortgage book.

Westpac’s mortgage book totalled $26.46 billion at September 30 and another $5.18 billion was off-balance sheet, mainly loans approved but not drawn down. That compared with $26.37 billion at June 30 when another $5.1 billion was off-balance sheet.

Using Reserve Bank figures as a proxy for the market, its share of the mortgage market dipped to 17.27% from 17.34% at June 30.

Mortgages with loan-to-value ratios above 90% at September 30 jumped to $2.68 billion, or 8.5% of the total book, from $1.58 billion, or 5% of the total book at June 30. However, total loans with LVRs above 80% fell to $7.92 billion, or 25% of the book at September 30, from $8.14 billion, or 25.9%, at June 30.

Westpac classed $190 million of its mortgages as impaired at September 30, up from $79 million a year earlier, while mortgages classed as "past due but not impaired" shrank to $1.62 billion from $2.64 billion a year earlier.

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