Wespac's mortgage book gallops but profit falls
Westpac's New Zealand subsidiary's mortgage book galloped away in the December quarter, growing much faster than its market share and at nearly double the rate of the previous quarter.
Friday, February 26th 2010, 1:49PM
by Jenny Ruth
However, the subsidiary's net profit fell sharply in the December quarter as net interest income and fees and commissions fell while operating expenses and charges for bad loans both rose.
Westpac's net profit fell 64% to $42 million for the three months ended December 31. Net interest income fell 7.2% to $285 million in the three months while income from fees and commissions dropped to $78 million from $88 million in the same three months a year earlier.
The bank's charges against profit for bad loans rose to $125 million in the quarter, with residential mortgages accounting for $56 million, compared with $91million in the year-earlier quarter.
Westpac's mortgage book grew $609 million to $27.99 billion in the three months. That compares with the $358 million growth in the September quarter. Based on Reserve Bank figures, Westpac accounted for 39.2% of all new lending on mortgages by registered banks in the December quarter.
That raised its share of the market to 17.26% from 17.05% three months earlier, again based on Reserve Bank figures.
Westpac had a further $5.31 billion in undrawn mortgages at December 31.
Westpac's mortgages with loan-to-value ratios (LVRs) above 80% continued to decline to 24.8% of its mortgage book at December 31 from 25.8% three months earlier and 28.2% in December 2008.
Westpac's New Zealand branch, which includes its wholesale operations as well as the subsidiary's results, saw net profit rise 54.3% to $341, boosted by a $188 million tax credit as a result of its settlement with the Inland Revenue Department over its structured finance transactions.
On December 23, Westpac reached and agreement with IRD to pay 80% of the tax owed as a result of the High Court ruling last August against it on its structured finance transactions.
| « Tax credit boosts BNZ profits despite underlying profit drop | ANZ's profit rises but mortgage book stalls » |
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