How much did Westpac grow its home loan business?

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Westpac's mortgage book grew between $170 million and $203 million in the three months ended March and it looks like it increased its market share.

Wednesday, May 18th 2011, 8:43AM

by Jenny Ruth

Westpac's profitability also rose strongly in the quarter as its net interest income grew at a healthy pace while its charges against profit for bad loans continue to abate.

The bank's general disclosure statement (GDS) for the quarter for its New Zealand subsidiary (its branch's GDS, which includes all its New Zealand activities, hasn't been released yet) shows using the capital adequacy-based based measure of its mortgage book goodreturns.co.nz has used since December 2002 threw up just as nonsensical figures as did its December quarter GDS.

By that measure, Westpac's mortgage book grew by $1.63 billion to $34.3 million in the March quarter following even more unbelievable growth of $3.53 billion in the December quarter.

However, its note on loans shows its housing loans growing $170 million to $34.47 billion following $53 million growth in the December quarter. Unfortunately, not all the home lending banks provide an equivalent note, making comparisons problematic.

While Reserve Bank figures on mortgage lending have a poor correlation to the figures disclosed in banks' GDSs, they show mortgage lending by registered banks grew $472 million in the March quarter, up from $368 million in the December quarter.

If the central bank's figures could be relied upon, that would put Westpac's share of new mortgage lending in the quarter at 36% and its share of the total market at 18.8%.

For the first time, in its table on its loan-to-valuation (LVR) exposures Westpac has provided a reconciliation between its LVR amounts and the amounts disclosed in the note on loans which excludes off-balance sheet housing loans, generally those approved but not drawn down.

Including off-balance sheet housing loans - generally those approved but not drawn down - and fair value hedge adjustments, Westpac's mortgage book grew by $203 million to $39.95 billion.

Goodreturns.co.nz will probably use this measure for all the banks from now on because it is likely to become the most comparable.

Westpac's net profit jumped 29.7% to $96 million in the quarter, taking profit for the six months ended March to $191 million, up 64.7% on the same six months a year earlier.

Net interest income grew 14.8% to $326 million in the quarter while charges for bad loans fell 17.1% to $68 million.

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