Westpac's Q4 profit and mortgage market share shrink

Westpac New Zealand’s fourth quarter net profit shrank slightly as its provisions for bad debts rose and its share of the mortgage market also dipped.

Wednesday, December 24th 2008, 5:00AM

by Jenny Ruth

Westpac’s latest general disclosure statement shows net profit for the three months ended September was $97 million compared with $98 million in the same three months a year earlier, although net profit for the year ended September was up 25.3% to $559 million.

The bank’s charge against profit for impaired loans rose to $170 million for the year ended September from $97 million for the nine months ended June and compared with $85 million for the year ended September 2007.

Charges against profit for impaired residential mortgages nearly doubled to $33 million for the latest year from $18 million the previous year.

Total impairment provisions jumped to $322 million from $220 million the previous year, with residential mortgages accounting for $54 million, up from $35 million, but still remaining a fraction of the total mortgage book.

Westpac’s mortgage book totalled $26.46 billion at September 30 and another $5.18 billion was off-balance sheet, mainly loans approved but not drawn down. That compared with $26.37 billion at June 30 when another $5.1 billion was off-balance sheet.

Using Reserve Bank figures as a proxy for the market, its share of the mortgage market dipped to 17.27% from 17.34% at June 30.

Mortgages with loan-to-value ratios above 90% at September 30 jumped to $2.68 billion, or 8.5% of the total book, from $1.58 billion, or 5% of the total book at June 30. However, total loans with LVRs above 80% fell to $7.92 billion, or 25% of the book at September 30, from $8.14 billion, or 25.9%, at June 30.

Westpac classed $190 million of its mortgages as impaired at September 30, up from $79 million a year earlier, while mortgages classed as "past due but not impaired" shrank to $1.62 billion from $2.64 billion a year earlier.

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