Westpac grabs 44% of all new home loans

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Westpac continued to grow its mortgage book aggressively in the June quarter and its profitability jumped sharply on much lower charges for bad loans.

Friday, August 20th 2010, 11:32AM

by Jenny Ruth

Wespac's June quarter general disclosure statement (GDS) shows its mortgage book grew by $390 million to $28.93 billion in the three months ended June 30.

While that was down from its $552 million growth in the March quarter, using Reserve Bank figures as a proxy for the mortgage market, Westpac's growth accounted for nearly 44% of all net new lending on mortgages by registered banks in the June quarter.

Also using Reserve Bank figures (actual figures won't be available until all the home lending banks have lodged their June quarter GDSs), Westpac's share of mortgages written by registered banks rose to 17.59% from 17.44% three months earlier.

Westpac's mortgage book has been growing much faster than its share of the market since the December quarter last year.

Depending on how good a proxy for the market the central bank's figures prove to be, that means Westpac and Kiwibank, the only other bank to have lodged its June quarter GDS so far, accounted for nearly 80% of all net new mortgage lending by registered banks in the quarter.

The two banks accounted for 67% of all actual net new mortgage lending by registered banks in the March quarter.

Westpac's net profit for the three months ended June rose nearly four-fold to $97 million from $26 million in the same quarter last year, taking net profit for the nine months ended June to $213 million, down 13.3% on the same nine months a year earlier.

The nine-month profit decline reflects Westpac's very weak first quarter.

The bank's charges against profit for bad loans fell dramatically to $27 million in the June quarter compared with $199 million in the same year-earlier quarter with charges for home loans accounting for $24 million.

The fall in bad loan charges was able to more than offset the 11.8% drop to $283 million in Westpac's net interest income in the June quarter and a fall in non-interest income to $66 million from $88 million in the June quarter last year.

Westpac's mortgages with loan-to-valuation ratios (LVRs) above 80% eased to 23.6% of its book from 24.6% at March 31, mostly reflecting a sharp decline in mortgages with LVRs above 90% to 8.9% from 9.7% three months earlier.

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