Westpac credit quality deteriorates

John Kavanagh

Westpac’s mortgage delinquencies picked up in the December 2023 quarter and are almost double the arrears rates reported in the past week by rivals Commonwealth Bank and Bendigo and Adelaide Bank.
 
The bank’s Australian mortgage delinquencies, measured as loans in arrears by 90 days or more, hit 95 basis points in the quarter – an increase of 9 basis points in three months.
 
Last week Commonwealth Bank reported that its home loan arrears rate was 52 bps in the six months to December, and yesterday Bendigo and Adelaide Bank also reported an arrears rate of 52 bps for the half.
 
CBA said its long-term average home loan arrears rate was 65 bps.
 
Westpac chief executive Peter King said in a statement that the higher arrears reflected the tougher economic environment.
 
“We remain focused on helping those customers facing high cost of living pressures and making difficult choice to manage household budgets,” King said.
 
Westpac’s impairment charge to average loans rose 3 bps to 10 bps during the quarter.
 
In comparison, CBA’s loan impairment expense represented 9 basis points of gross loans and acceptances – down from 11 bps in the previous corresponding period.
 
Westpac reported unaudited net profit of $1.5 billion for the quarter, down 6 per cent on the average for the two quarters in the September half last year. The bank said notable items related to hedge accounting was responsible for the fall.
 
The bank grew its Australian home loan book in line with system and its deposit book a little above system.