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Annual mortgage growth was aided by faster loan speed, Westpac has explained.
On Monday (7 November), Westpac Banking Corporation (Westpac) released its financial results for the full year ending September 2022, revealing improved growth in its Australian mortgage book.
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It announced annual loan book growth of 3 per cent, to $467.6 billion — up from last year’s $455.7 billion.
The lender partly attributed the growth to improve processing times.
According to the lender's 2022 Full Year Report, it has improved median time to unconditional approval for both direct and broker channels.
Its proprietary turnaround times reduced from an average of 9.6 days in September 2021 to 6.3 days in September 2022, the results show.
Turnaround times via third party dropped from 11.7 days last year to 8.1 days in September 2022, it continued. (Indeed, data from Momentum Intelligence's monthly Broker Pulse survey shows that brokers were experiencing turnaround times (to initial credit decision) of around eight days in September 2022).
The big four bank also launched a digital mortgage in this period, which had resulted in “increased use of digital lending application form[s]”, the major bank flagged.
At the report’s media event on Monday (7 November), Westpac highlighted that its owner-occupied loans were up 10.5 billion between March and September this year, despite a rising interest rate environment,
However, it forecast weaker growth going into 2023 as rates start to bite and the economic environment shifts.
The Adviser asked what Westpac’s strategy was doing to ensure flows continued - and the role that brokers had to play in this - to which Westpac chief executive Peter King replied that 'speed' would continue to be a priority. He said: “We run our [mortgage] services through our first party and the broker channel and it’s all about speed.
"And you can [see] the result [is that] we have increased speed, and so that speed has played a part in Westpac mortgages by first party and third party.”
Solid platform but tough times ahead
Overall, Westpac’s report showed hat owner-occupied mortgages had driven the bank’s financial year 2022 net consumer loan book growth by $11.9 billion or 3 per cent, while its net business loans were $6.5 billion or 8 per cent higher, with growth across most sectors.
Owner-occupier mortgages contributed an extra $10.5 billion the the second half of the financial year, adding to the $3.9 billion contributions in business lending and $11.2 in institutional lending. This resulted in an overall loan book of $739.6 billion for the financial year ending September 2022.
For Australian mortgages, Westpac's book grew 3 per cent between September 2021 to September 2022, rising from $455.7 billion to $467.6 billion.
“In 2022, we’ve delivered a solid financial result and made steady progress on our strategic priorities,” Westpac chief executive Mr King said.
“We’ve built positive momentum and positioned the company for the future.
“I’m pleased with our overall performance.
“We sharpened our focus on core banking, reduced costs, and improved service to customers.
“Westpac returned to growth in our key segments of Australian mortgages and business lending.
“After the work of the past two years, Westpac is now a simpler, stronger bank. We’re continuing to get our costs down, we’re simplifying our operations and our program of co-locating branches in similar locations is removing duplication.
“At the same time, we are investing in the right places, such as the launch of our digital mortgage and new personal finance management tools in the Westpac app.
“Most key credit metrics improved over the half, including a reduction in stressed assets and delinquencies. However, it’s important to acknowledge the challenges ahead as customers navigate the tougher environment.”
Mr King added that as a result of Westpac’s “simplification”, the bank has “sharpened [its] focus on performance”.
“Our mortgage book is growing in line with major bank system and time to approval has reduced,” he outlined.
“We have more work to do on investor mortgages, but we’re growing in business lending and results in the institutional bank have been strong, with loans up 26 per cent year-on-year.”
External factors and not hitting customer hip pockets
Outlining a range of global and domestic challenges, Mr King said the country was “charting [its] way through a period of high inflation and rapid increases in interest rates.”
He observed: “We are not yet seeing increases in hardship or stressed assets.
“Many customers built up savings during the past two years and 68 per cent remain ahead on their mortgage repayments.
“However, it is inevitable that the impact of higher rates will be felt, including when borrowers’ low fixed-rate loans are rolled over.”
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