Westpac maintains market share

Westpac maintained its share of the mortgage market and its profitability jumped 81.3% in the June quarter, thanks to falling bad debts and a 25% rise in net interest income.

Monday, September 3rd 2012, 6:49AM

by Jenny Ruth

Westpac's June quarter disclosure statement shows Westpac's mortgage book grew by $326 million to $35.8 billion in the three months. That's down from its $489 million growth in the March quarter but well above the December quarter's $29 million growth.

If Reserve Bank figures prove a good proxy for the numbers in banks' quarterly statements, that meant Westpac's market share was steady at 20.67% between the March and June quarters.

Most of the growth, $237 million, came from mortgages with loan-to-valuation ratios (LVRs) below 80% with another $77 million of growth coming from mortgages with LVRs between 80% and less than 90%. Those with LVRs above 90% grew by just $12 million.

The latter accounted for 8.8% of Westpac's mortgage book at June 30 while those with LVRs below 80% accounted for 75.7%, the same as at March 31.

Westpac's net profit jumped to $174 million in the three months from $96 million in the June quarter last year, taking its nine-months profit to $465 million, up 62% on the same nine months a year earlier.

The June quarter rise reflects charges against profit for bad debts more than halving to $31 million compared with $64 million in the June quarter last year while net interest income rose to $395 million from $316 million.

Banks generally are experiencing higher profit margins because so many mortgage holders have switched to higher-margin floating rate loans. Westpac's 25% increase in net interest margin is significantly higher than ANZ Bank's 3.2% increase in the June quarter and BNZ's 8% rise but is less than Kiwibank's 38% increase.

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