Lending losses actually fell at Westpac Banking Corp over the six months to March 2009, even though impaired assets climbed drastically, the quarterly "pillar 3" disclosure documents published by the bank yesterday show.There was also no growth in credit risk assumed by the bank, with credit risk measures for this alternative, and still pretty new, series of disclosures worked out differently to the balance sheet approach that informs half-yearly financial statements and the monthly data that turns up in APRA's banking statistics.Westpac's reported that its "exposure at default" was essentially static over the six months to March 2009 at $463 billion, excluding the effect of the takeover of St George Bank. Taking into account St George, Westpac reported credit risks of $582 million.The pillar three report, the third published by Westpac, shows lending losses declined in the March 2009 half, even as impaired assets more than doubled to $3.3 billion (and with the comparison again allowing for the inclusion of St George Bank).Lending losses declined on Australian credit cards, down to $108 million from $185 million and also declined on other retail (largely personal loans and overdrafts), to $55 million from $117 million.Recoveries on corporate loans meant that Westpac incurred no lending losses from the corporate book in the six months to March, helped by the fact that all the most troubled credits in this segment were well and truly identified by late 2007.The pillar 3 disclosure provides a more detailed breakdown of Westpac's impaired loans, by industry sector. Of $3.3 billion in impaired loans at March 2009, 30 per cent were in business services, 18 per cent in retail lending, 17 per cent in finance and insurance and 12 per cent in the less specific service category. Bad loans to finance and insurance was the fastest growing category over six months.The disclosures imply a mild deterioration in the credit quality of Westpac's corporate loans with an increase in the risk weight to 55 per cent at March 2009 from 52 per cent at September 2008. There was mild improvement in business loans, though, with the average risk weight on business lending falling to 62 per cent at March 2009 from 64 per cent at September 2008, though this may be from rolling in the St George loan book. Among small business loans the risk weight fell to 38 per cent from 40 per cent.Westpac assessed its credit card portfolio as riskier now than six months before, with the risk weight rising to 33 per cent from 27 per cent. The risk weight on the home loan book was stable at 16 per cent.