Westpac's mortgage book grew strongly in June Qtr

Westpac's New Zealand mortgage book apparently grew strongly in the June quarter when a sharp drop in bad loans helped net profit jump 34.7%.

Tuesday, August 16th 2011, 9:36PM

Westpac is the first of the banks to release its June quarter disclosure statement which showed net profit rose to $287 million from $213 million in the June quarter last year as charges against profit for bad loans fell to $189 million from $234 million.

Of those bad loans, most, $129 million related to business lending while $61 million related to mortgages.

Westpac's net interest income grew 11.6% to $951 million in the three months.

Using the capital adequacy-based based measure of its mortgage book GoodReturns has used since December 2002, Westpac's mortgage book grew by $347 million to $34.65 billion in the three months.

Its loan-to-valuation ration (LVR) table shows identical figures for on-balance sheet exposures. If off-balance sheet exposures, such as revolving credit loans and loans approved but not drawn down, are included, then the loan book grew by $465 million to $40.42 billion.

However, its note on housing term loans shows the book grew by $279 million to $34.75 billion. Unfortunately, not all the home lending banks provide an equivalent note, making comparisons on this basis impossible.

While Reserve Bank figures on mortgage lending have a poor correlation to the figures disclosed in banks' quarterly disclosure statements, they show mortgage lending by registered banks grew by $878 million to $168.4 billion in the June quarter compared with $472 million in the March 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 anywhere between 31.8% and 53% for the June quarter.

Westpac's actual market share, based on its on-balance sheet LVR figures, at March 31 was 20.46%

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