Westpac sped up mortgage lending three-fold in March half year

Westpac New Zealand sped up its pace of mortgage lending in the six months ended March, adding $1.51 billion in net new mortgages after growth of only a third of that in the previous six months ended September.

The mortgage book stood at $68.98 billion at March 31, according to the loan-to-valuation ratio (LVR) table in Westpac’s latest disclosure statement, up from $67.47 billion at Sept 30 and $66.97 billion at March 31 last year.

Westpac NZ chief executive Catherine McGrath noted that her bank is the smallest of the big four Australian-owned banks.

“We’re not satisfied with that position and we are competing hard to grow,” McGrath said.

Westpac’s lending to first-home buyers increased 12% by number to 3,463. “We’re also driving the growth of social and affordable housing by providing $334 million of new lending to help more families into affordable homes,” she said.

The bank’s lending through mortgage advisers also grew to 55.2% of its total book at March 31 from 53.8% at Sept 30.

Westpac doesn’t publish how much of net new mortgage lending advisers account for but McGrath told GoodReturns/TMMonline it was 63% in the year ended September last year.

Westpac’s lending to property investors grew to 25.7% of the book at March 31 from 25.6% at Sep 30 but interest-only loans eased to 15% of the book from 15.5% six months earlier.

Its appetite for riskier lending appeared to have increased, with 6.4% of the book now at LVRs between 80% and 90%, although those were LVRs above 90% were steady at 2.6% of the book. About 49.8% of the book had LVRs of less than 60%.

Westpac NZ’s statutory net profit for the six months rose a bare 0.5% to $565 million compared with the previous first half, with charges against profit for bad debts rising to $33 million from $23 million. The parent bank’s net profit fell 1% to A$3.32 billion.

The flat result was despite net interest margin (NIM) rising to 2.26%, up 15% basis points from the previous first half but up just 3bp from the September half year.

Westpac’s mortgages with payments behind by more than 90 days rose to 0.54% of the book from 0.49% at Sept 30 while those more than 30 days behind rose to 1.06% from 0.96%.

Westpac’s total stressed exposures were up 8bp at 1.63% of total lending from March last year, but were down 10bp from Sept 30.

The bank didn’t close any branches in the latest six months after closing six in the September half year and it removed 33 ATMs between March last year and March this year, cutting total numbers to 374.

Deposits were up 2% at $80.9 billion and covered 78.4% of Westpac’s lending, up from 78.2% a year earlier.

With political pressure aimed at the profitability of the big four banks, Westpac’s return on average tangible equity (ROTE) was 12.5%, up from 11.9% in the previous first half but down from 14.1% in the September half year. The parent’s ROTE was 11.1% in the latest six months, 140bp lower.