Westpac's mortgage growth slows

Westpac continues to grow its mortgage book at a faster rate than its market share although its momentum is slowing.

Friday, December 3rd 2010, 12:24PM

by Jenny Ruth

Westpac's September quarter general disclosure statement (GDS) shows its mortgage book grew by $210 million in the quarter. Using Reserve Bank figures as a proxy for the mortgage market, Westpac accounted for 26.1% of all new lending on mortgages by registered banks in the three months.

However, its mortgage lending growth slowed markedly from the $390 million added in the June quarter and $552 million in the three months ended March.

Also using Reserve Bank figures, Westpac's share of all mortgages written by registered banks was 17.52% at September 30, up from 17.48% three months earlier and compared with 16.96% in September last year.

While the government-owned Kiwibank's momentum is also slowing, it and Westpac have accounted for the lion's share of new mortgage lending by banks this year.

If the Reserve Bank figures are close to actual new lending in the September quarter (which won't be known until three other banks, Bank of New Zealand, SBS Bank and TSB Bank, have lodged their GDSs), then Kiwibank and Westpac will have accounted for 62.6% of new mortgage lending in the quarter.

The two banks accounted for 65.2% of actual new lending by registered banks in the June quarter and 67% in the March quarter.

Westpac's September quarter net profit jumped 21.7% to $73 million as net interest income recovered - it was up 5.8% to $312 million in the quarter - and operating expenses fell - down 4.6% to $186 million. For the year ended September, net interest income was down 11.6% to $1.16 billion while operating expenses fell $4 million to $704 million.

Charges against profit for bad loans fell $5 million to $100 million in the latest quarter which charges for mortgages gone bad dropping to $23 million from $32 million in the September quarter last year.

Westpac's mortgages with loan-to-valuation ratios (LVRs) above 80% eased to 22.9% of its loan book from 23.6% at June 30.

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