Westpac records above average lending growth

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Westpac's New Zealand subsidiary saw a sharp drop in profitability in the September quarter, reflecting rising charges against profit for bad loans, although its mortgage lending grew faster than the average of the other banks.

Monday, December 21st 2009, 7:43AM

by Jenny Ruth

Its general disclosure statement for the quarter shows net profit fell 38% to $62 million, taking the fall in profit for the year ended September to 55.9% to $248 million.

The bank's charges against profit for bad loans rose $105 million in the September quarter, taking annual charges to $620 million.

Most of Westpac's burgeoning bad debts are from its corporate lending - mortgages gone bad accounted for $102 million of the annual charges.

The Westpac subsidiary's net interest income also slipped in the quarter, falling 8.1% to $295 million from the same quarter a year earlier, although annual net interest income was up 3.2% at $1.32 billion.

Westpac's mortgage book totalled $27.38 billion at September 30, up $358 million from June 30 which compared with the $136 million growth in the June quarter. Using Reserve Bank figures as a proxy for the market, Westpac's new mortgage lending accounted for 23.4% of the increase in lending on mortgages by registered banks in the September quarter.

That meant its market share rose from just below 17% at June 30 to 17.05% at September 30.

Westpac had a further $5.24 billion in undrawn mortgages at September 30.

Westpac's mortgages with loan-to-value ratios (LVRs) above 80% continued to decline to 25.8% of its mortgage book at September 30 from 26.9% three months earlier and 28.2% in December 2008.

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