Westpac yesterday reported an increase in stressed exposures and delinquent loans in its mortgage business during the six months to March. Mortgage delinquencies (90 days or more in arrears) rose 14 basis points to 60 basis points during the half.Westpac chief executive Gail Kelly said the increase in delinquencies was not unexpected. Kelly said: "We have seen the cycle play out through the financial crisis. It is off a small base and it is manageable. The overall health of the portfolio is very good."The bank's chief financial officer, Phil Coffey, said the delinquencies were not flowing through to higher loss levels. "That is a function of our underwriting standards," he said.He said the increase in delinquencies was due, in part, to a statistical aberration. "We did a lot of lending in 2007, 2008 and 2009. Delinquencies reach a peak two or three years into the loan, and you are seeing that now."Because we have done less new lending since then, the average rate of delinquencies is going up."Analysts questioned the wisdom of the bank reducing its collective provision at a time when delinquencies were rising. The collectively assessed provision for impairment charges was reduced from $3.4 billion to $3.2 billion during the half.The ratio of total impaired assets to gross loans rose from 95 to 98 basis points during the half, while the ratio of collectively assessed provisions to credit risk-weighted assets fell from 146 to 138 basis points.Coffey rejected the suggestion the bank was cutting its collective provision to help earnings. "The change in the total charge is to do with lower individually assessed provisions," he said.