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Australia's Westpac sees higher defaults in third quarter
[SYDNEY] Australia's No 3 lender Westpac Banking Corp said on Thursday its level of stressed assets edged up in the three-months to June as a mining downturn led to higher corporate as well as consumer defaults.
Westpac increased its bad debt charges to a six-year high in the first-half in anticipation of a rise in bad debts, but said in a limited third-quarter update that bad debt ratios were still near all-time lows.
It set aside less money for bad debts in the third-quarter, compared to the quarterly average in the first half-ended March. Bad debt charges nearly doubled in the first half to a six-year high of A$667 million (S$687.5 million).
Westpac, which posted a 3 per cent rise in first-half cash earnings to A$3.9 billion, did not disclose profit or revenue numbers in its limited third-quarter update.
Non-interest income from fees and commissions during the quarter was 5 per cent below the first-half quarterly average due to lower markets-related income and a decline in fees from debt market activity, it said.
Its common equity Tier-1 capital ratio slipped to 10.1 per cent at the end of June from 10.5 per cent in March. The bank said it expected the ratio to drop by another 110 basis points, thanks to a regulatory change to the treatment of Australian mortgages.
Earlier this week, smaller rival ANZ Banking Group signalled the need for more capital following the regulatory change.
Westpac shares were down 2.6 per cent in morning trading, compared to a 0.8 per cent drop in the broader index. ANZ, National Australia Bank and Commonwealth Bank were down 1-1.8 per cent.