A deep dive into Westpac's results

McGrath says it was “a solid result” and once notables, such as the sale of Westpac Life, are excluded “it was slightly down year-on-year, and our margin was flat on 2021”.

“What's great to see is we've got returning momentum to the business. So we've particularly in the second half we were lifting our market share in both mortgages and business lending.”

Westpac’s home lending was up 5% which is on par with system growth over the year.

Mortgage advisers now account for 51% of Westpac’s home loan book. That is 8.5% growth from 46.7% to 51% during the year. As it is the total book that indicates adviser flow, or the amount advisers originated during the year was well over the 50% mark.

McGrath says the CCCFA regulations partly drove the increase in adviser market share.

“I think there's a view that says that going to a broker can make that a bit more straightforward and that a broker will do more of the paperwork for you. So, I think that's part of what's driving that trend.

It was a year of two halves though with growth below market share in the first half and above in the second half of the year.

Of the second half McGrath says “it's a really good indication of our teams having the right conversations with customers and making sure that we've got both prices and processes right.”

Like ANZ a week before, she talked about supporting customers as they face higher interest costs.

With customers facing harder times Westpac is “making sure that our bankers are more available for our customers with branches open longer and we are putting more people to be able to talk to our customers on the phone.”

“We think it's going to be really important that we have that capacity to have conversations with customers by doing earlier outreach with them to make sure that we help them manage any shocks that they're seeing in terms of their cost of borrowing going up.”

Westpac has around 49,000 loans with an interest rate of less than 4.00% that are rolling off between Oct 1 and March 31.  (Its first half 2023 reporting period).

Another 39,000 loans at an interest rate of less than 4.00% are rolling off in the second half (between Apr 1 and September 30.

McGrath says the bank is not seeing any signs so far of customers being in trouble, but it is being proactive monitoring them. One strategy is to contact borrowers earlier than usual when loans are coming up for rollover.

“By contacting them even earlier, it means we can help them think through are there any adjustments that they need to make and what are the ranges of rates that they could possibly have.”

“The second thing that we are doing is we are using the data that we have to see if we've got any early warning signs that somebody may start to struggle.”

The bank offers a 60-day rate lock window and it is contacting customers “at sort of minus 75 days to make sure that we're having that conversation even earlier.”

McGrath says the bank is not seeing any negative equity situations but is keeping an out for any.

Her message to home-owners was not to be too worried about negative equity.

“I don't think there's too much concern about negative equity because you'll be holding onto it for quite some time.”

She says this is not the same as saying that in the long run house prices always go up.

“(It’s) not quite the same as that. But I think what we are seeing is a quite acute reduction reflecting what we are seeing in the economy at the moment.”

“The second thing that I think is really important is that if you bought a home and you're now in negative equity, when you look to roll over to another fixed rate, we won't be looking at whether or not you are in negative equity as part of that conversation.”

As long as the loan stays exactly the same Westpac will treat the borrower “exactly the same way as you were when you took out the home loan in the first place.”