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The major bank has revealed an increase in new lending activities, while also noting a slight uptick in delinquencies.
Westpac has released its 3Q23 update for the period ended 30 June 2023, revealing an increase of $6.4 billion in new loans received by the bank.
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A significant portion of this growth stems from loans for owner-occupied mortgages, with the bank’s business lending also contributing to the loan expansion.
The group’s total mortgage portfolio now stands at $478.4 billion.
Notably, owner-occupied loans have risen to $66.7 billion, up from $66.4 billion in March 2023.
Conversely, investor property loans decreased to $31.9 billion from $32.2 billion in March 2023.
Variable loans continue to comprise a significant portion of their portfolio, accounting for 71 per cent of total loans.
Furthermore, the bank’s data revealed that $27 billion worth of fixed-rate loans were set to expire by the end of the year, with an additional $25 billion already expired in the third quarter of 2023.
Looking ahead, the bank’s forecast for the first half of 2024 anticipated $40 billion in fixed-rate loans expiring, followed by an estimated $29 billion in the second half of the same year.
This trend followed a surge in borrowers fixing their home loans during the record-low interest rates in 2019 and 2020.
As a significant number of fixed-rate loans transition away from their low interest rates, banks are closely monitoring delinquent borrowers.
The group’s 90-plus days delinquency rate for mortgage loans in Australia stood at 0.80 per cent, reflecting a slight rise in loans that have fallen behind on payments by 7 bps.
In response to higher-than-expected risk levels within their loans and credit exposures, the group has allocated additional resources to cover potential losses.
Consequently, credit impairment provisions total $5.1 billion as of 30 June 2023. This amount surpassed the expected losses in the base case economic scenario by $1.5 billion, as noted by Westpac.
However, over the course of 3Q23, the proportion of customers ahead on repayments remains unchanged, with 31 per cent of accounts being more than two years ahead.
Furthermore, the group’s deposit-to-loan ratio improved to 84.1 per cent during the third quarter. This indicated a favorable balance between customer deposits and issued loans, with the bank having more funds available from customer deposits.
[Related: One million borrowers yet to roll off fixed-rate cliff: RBA]
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