Westpac has released a June quarter update on its credit quality, capital and funding, reporting that credit quality improved during the quarter.

Mortgage delinquencies (90 days or more in arrears) fell 5 basis points to 83 bps in Australia and fell 2 bps to 28 bps in New Zealand.

Stressed exposures as a percentage of total committee exposures have fallen from a peak of 1.9 per cent in September 2020 to 1.1 per cent in the March quarter this year and 1.06 per cent in the June quarter. Stressed exposures include delinquencies, impaired loans, watchlist and substandard loans.

The ratio of provisions to credit risk weighted assets fell from 130 bps in the March quarter to 125 bps in the June quarter.

There was an increase in Australian consumer finance delinquencies, with loans 30 days or more in arrears currently at 3.16 per cent and loans 90 days or more in arrears at 1.76 per cent.

On capital, common equity tier 1 capital is 10.75 per cent, down from 11.33 per cent in March. The reduction reflects the impact of the March half dividend payment and an increase in risk weighted assets.

The capital adequacy standard requires that higher interest rates be reflected in a higher regulatory embedded loss.

The bank said CET1 was 11 per cent on a pro forma basis, based on the sale of Westpac Life, which was completed on August 1, and other sales announced but not yet completed.

On the funding side, it has issued $34 billion of term debt so far this financial year, with $5 billion of maturities outstanding. It has $38 billion of maturities in 2022/23 and $40 billion in 2023/23.

The ratio of customer deposits to net loans rose from 83.5 per cent in the March quarter to 83.1 per cent in the June quarter.