‘Many facing pressures’: Westpac mortgage arrears, business lending weighs on bank’s book

More Westpac mortgage holders are falling behind on their payments while the bank posts a flat $1.8bn profit for the latest quarter.

More mortgage holders are behind on repayments and businesses are battling falling demand as cost-of-living grinds on the Australian economy, Westpac’s latest quarterly results show.

In a third quarter update to the ASX on Monday, Westpac chief executive Peter King said financial headwinds were tough.

“The cost of living and high-interest rates remain a challenge for some customers while many businesses are facing cost pressures and experiencing lower demand,” he said.

Cost of living is a challenge for ‘some’ Westpac customers, chief executive Peter King says. Picture: NewsWire / Tertius Pickard

“We encourage customers to call us if they need help.”

Mortgage holders with Westpac in 30 days of arrears have risen to 1.9 per cent. The number of mortgage holders 90 days behind in payments increased to 1.12 per cent.

The bank’s delinquency and watch list has also grown to 1.42 per cent of its lending book, an increase of 26 basis points in a year.

In 2022 Westpac nabbed a six-year deal to sponsor the NSW Blues. Picture: NewsWire / Glenn Campbell

Westpac posted an unaudited net profit of $1.8bn for the past three months, up 6 per cent.

The bank continues to make more money on the high interest rates. The net interest margin – a key financial signpost – rose from 1.89 per cent to 1.92 per cent.

But the majority of non-performing loans Westpac is carrying are corporate and business lendings. The bank’s “non-performing (credit) exposures” - where the borrower is 90 days behind, and/or the bank is unlikely to get the principal and interest back in full - sit at $827m for businesses, and $703m for property loans.

Westpac’s half-yearly profit has grown six per cent. Picture: NewsWire / Gaye Gerard

The bank’s Australian household deposits grew 3 per cent in the past quarter, and household loans grew 8 per cent, which is higher growth than the other deposit-taking institutions monitored by the regulator APRA.

Released last week, Commonwealth Bank’s full-year results show a similar climb in mortgage-payers falling behind.

CommBank’s arrears in expired fixed rate home loans jumped noticeably, up from 0.92 per cent to 1.3 per cent, though below the 15-year average of 1.38 per cent.

Home loans in 90-plus days of arrears at Australia’s biggest bank jumped from 0.47 per cent to 0.65 per cent, last week’s results show.