Working out Westpac's home loan book

Westpac's New Zealand mortgage book probably grew somewhere between $50 million and $80 million in the three months ending December.

Thursday, March 3rd 2011, 5:00AM

by Jenny Ruth

The bank's general disclosure statement (GDS) for the quarter for its New Zealand branch, which includes the operations of its New Zealand subsidiary, shows, using the same capital adequacy-based measure GoodReturns has been using since December 2002, its mortgage book grew by $70 million to $34.18 billion in the three months.

As Good Returns has already reported, the same measure in the GDS for Westpac's subsidiary shows its mortgage book grew by an unbelieveable $3.53 billion to $32.68 billion in the same three months.

Under Reserve Bank rules, the branch GDS is prepared using Basel l rules while the subsidiary's uses Basel ll rules, so some difference is to be expected, although Westpac does no mortgage lending through its New Zealand branch.

The branch GDS note on loans shows housing term loans growing by $80 million to $34.22 million in the three months. The subsidiary GDS showed housing term loans at $34.3 billion at December 31, $53 million higher than at September 30.

The loan-to-valuation ratio (LVR) table in both GDSs shows exactly the same figures: Westpac's mortgage book grew $5.38 billion to $39.75 billion during the December quarter.

However, Westpac says the September quarter LVR figures were prepared using only on-balance sheet exposures while the December quarter LVR figures include both on-balance and off-balance sheet mortgages, mostly those approved but not drawn down. The change was due to the previously unclear rules for preparing the LVR figures being clarified, Westpac says.

So, on a like-for-like basis, the LVR figures show both on and off-balance sheet mortgages grew $70 million to $39.75 billion. Taking on-balance sheet mortages only, though, its mortgage book fell $225 million to $34.14 billion. GoodReturns is investigating how comparable LVR figures are between banks.

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