Westpac's mortgage book resumed aggressive growth in March Qtr

Westpac New Zealand's mortgage book resumed its aggressive growth in the March quarter, indicating the slowdown seen in the December quarter was a blip in a longer-term growth trend.

Friday, June 1st 2012, 1:28PM

by Jenny Ruth

The loan-to-valuation ratio (LVR) table in the bank's March quarter disclosure statement shows its mortgage book grew by $489 million to $35.48 billion in the three months. That follows the $29 million growth shown in the December quarter and easily beats the $309 million and $347 million growth the bank showed in the September and June quarters of last year.

Although Westpac has been reporting these figures in their current form since the March quarter last year, its earlier figures suggest its share of the mortgage book has been growing since the September quarter of 2009.

Assuming Reserve Bank data will prove a reasonable proxy for the LVR figures in all the banks' disclosure statement, the latest quarter's growth takes Wespac's share of mortgages written by registered banks to 20.7% at March 31, up from 20.55% at December 31.

Despite a lot of annecdotal and some actual evidence that banks have been relaxing their credit criteria in recent months, Westpac's figures show the bulk of its March quarter growth came from relative conservative lending.

Its loans with LVRs below 80% rose by $485 million in the quarter while those with LVR's between 80% and 89%  sell $2 million and those with LVRs above 90% increased $6 million.

Westpac's mortgages with LVRs below 80% accounted for 75.7% of its portfolio at March 31.

Westpac's growth doesn't appear to be coming at the expense of profitability either. Net profit for the three months ended March 31 rose 80.9% to $85 million, reflecting a 22.6% rise in net interest income to $353 million and increases in non-interest income such as fees and commissions.

Offsetting that somewhat, charges against profit for bad loans rose slightly to $79 million from $67 million with most of the increase coming from business loans.

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