Powered by MOMENTUM MEDIA
the adviser logo
Lender

Westpac sees $17.5bn of mortgages reclassified

by James Mitchell4 minute read
Westpac

Westpac has seen $17.5 billion of investment property loans switched to owner-occupied loans in the first half of 2016 following the introduction of differential pricing.

Announcing its half-yearly results yesterday, the major bank reported that its total mortgage book increased $15 billion or 4 per cent over the period.

Owner-occupied home loans grew 15 per cent to now comprise 54 per cent of the portfolio, while its investment property loans reduced 8 per cent to now comprise 40 per cent.

“Following the introduction of differential pricing between mortgage products, there were $17.5 billion of net switching from investment property loans to owner-occupied during the first half of 2016,” the bank said in a trading update.

Advertisement
Advertisement

Westpac CEO Brian Hartzer said the group had delivered a sound result in a volatile economic environment with significant regulatory change.

“The consumer bank delivered strong home loan and deposit growth and well-managed margins,” Mr Hartzer said, adding that Westpac’s business bank also recorded sound balance sheet growth, particularly in SME, with margins stable over the period.

However, he noted that sector headwinds contributed to a softer performance in other divisions.

“In particular, Westpac Institutional Bank (WIB) was affected by lower net interest margins and significantly higher impairment charges related principally to four large exposures which added $252 million to provisions,” Mr Hartzer said.

In response to regulatory change, Westpac raised around $6 billion in equity over the 2015 calendar year, lifting the group’s common equity Tier 1 ratio to 10.5 per cent, or around 2 percentage points higher than a year earlier.

“These actions have materially strengthened the group’s capital base but have impacted earnings per share and return on equity,” Mr Hartzer said.

“Importantly, on most measures, overall asset quality remains sound, with the level of stressed assets little changed over the half.

“There have been a few pockets of stress, mostly related to lower commodity prices, and an increase in provisions for a small number of larger exposures, which contributed to a rise in impairment charges.”

[Related: Brokers react to Westpac's shock lending decision]

westpac  x

James Mitchell

James Mitchell

AUTHOR

James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.

JOIN THE DISCUSSION

You need to be a member to post comments. Register for free today

MORE FROM THE ADVISER

Stephen Hale ta

MFAA launches near-prime, specialist loan resource

Coined Finance for when your customer doesn’t fit the mould: A broker’s guide to near-prime and...

READ MORE
Daniel Newell Gedda

Specialist lender LoanU rebrands to Gedda

The personal and auto loan provider LoanU, which specialises in helping Australians with impaired credit histories...

READ MORE
tech tools

CBA introduces AI technology to combat scams

New figures released by the competition watchdog this week have revealed that Australians lost more than $2 billion...

READ MORE
magazine
Read the latest issue of The Adviser magazine!
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target reports to an audience of professional mortgage and finance brokers
Read more