BankWest a drag on CBA asset quality
Some sort of resolution of the problems at Bank of Western Australia may be under way, even though impaired loans continued to rise at a pretty fast pace in the September 2009 quarter.The quarterly "pillar 3" disclosure for BankWest, published yesterday, shows that impaired loans increased 19 per cent over the three months to September 2009 to $1.63 billion. (This is the same percentage rise in the level of impairments for the quarter reported by Suncorp earlier this week.)Almost all the increase in impairments at BankWest, as at Suncorp, was among corporate loans. Most of these will be loans to property developers.Loans 90 days or more past due declined 31 per cent to $446 million. In this case most of the decline was among corporate loans, which suggests that the problematic loans are being resolved one way or the other and the flow of new troubled customers is on the wane.BankWest increased its collective provision by $168 million to $830 million over the quarter.The rise in impaired loans at BankWest accounts for all of, and then some more, of the rise in impaired loans reported by Commonwealth Bank last week for the quarter. CBA bought BankWest eleven months ago. BankWest accounted for about two thirds of the $60 million rise in the collective provision for CBA over the quarter.