Westpac earnings rise 10% but mortgage lending slows as borrowers pay off loans faster

Westpac has reported a 10% rise in first-half cash earnings to $3.52 billion despite what it called “challenging" conditions for the six months to March 31.

It is the second of the big four banks to release financial results in the current reporting season, following ANZ beating analysts’ expectation and posting a 10% rise in first-half cash profit to $3.2 billion for the six months to March 31.

Westpac mortgage lending lifted just 1% over the six month period with particurlarly strong growth through its Bank of Melbourne brand, which has aggressively promoted its discounted home loans.

The report notes that growth in new lending was “partly offset by high run-off as customers use lower rates to repay faster”.

"Including mortgage offset account balances, 70% of customers are ahead of scheduled payments, with 20% of these being more than two years ahead," says Westpac.

"Excluding mortgage offset account balances, 56% of Australian mortgage customers are ahead of scheduled payments."

The bank strengthened its balance sheet with customer deposits up 12% rising from 67.6% to 69% of loans.

The bank has a $321.9 billion housing loan book of which 48% are owner occupier mortgages, 42% are investment loans and 10% portfolio/line of credit loans.

First-home buyers make up 12% of its mortgage book.

Other mortgage results:

  • 90+ days delinquencies remain at low levels at 0.58%, up 6 basis points on the previous six months.
  • 30+ days delinquencies are 1.43%, up 24 basis points "reflecting normal seasonal trends"
  • 248 property repossessed as of March 2013, down from 289 at September 2012 and 423 at March 2012
  • Portfolio losses total $52 million or 0.03% of the mortgage portfolio

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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