Westpac released its June quarter update yesterday, reporting a “modest deterioration in credit quality”, while offset account balances continue to provide an effective buffer for borrowers. The bank reported that Australian mortgage delinquencies (90 days or more in arrears) rose 7 basis points to 80 bps in the June quarter. New Zealand delinquencies rose 3 bps to 32 bps. Westpac booked an impairment charge of A$275 million for the quarter, made up of $19 million of individually assessed provisions and $256 million of collective provisions. The charge in the March half was $390 million. The individually assessed provision was a single name in manufacturing and the collective provision included write-offs and economic forecasts. In its business lending portfolio, the biggest increase in stressed exposures was in its construction portfolio. The bank said this was due to a single name being added to its watchlist. The proportion of home loan customers ahead of repayments, including offset balances, remained unchanged as 74 per cent, and 31 per cent were ahead by two years or more. Offset account balances fell from $54 billion in the March quarter to $53 billion in the June quarter. The proportion of loans in negative equity fell from 0.8 per cent in the March quarter to 0.6 per cent in the June quarter, thanks to rising house prices. Fixed-rate mortgage expiries picked up during the quarter, rising from $19 billion in the March half to $25 billion during the June quarter. The bank said another $27 billion to fixed-rate loans will expire in the September quarter. The bank reported a net profit of $1.8 billion for the quarter, compared with a profit of $4 billion for the March half. “Core” net interest margin of 1.86 per cent was down 4 bps, compared with the March half. Expenses were up 5 per cent, compared with the March half. The bank said this was due to inflationary pressure, including higher supplier costs and wages, as well as higher investment in technology and a customer simplification program.