subscribe to our newsletter

Plunge in volumes ‘deliberate’ and ‘self-inflicted’: Westpac

The major bank has released its full-year results, reporting a $14.7 billion slide in mortgage volumes, which according to CEO Brian Hartzer was partly “deliberate” and partly “self-inflicted.

Westpac Group has released its full-year results for the 2019 financial year (FY19), recording a statutory net profit after tax of $6.7 billion, down 16 per cent on FY18.

The group’s headline result was driven by a 1 per cent decline in net interest income ($16.9 billion) and a 15 per cent slide in non-interest income ($3.7 billion), compounded by a 3 per cent increase in total expenses ($10 billion).

Subdued activity in the mortgage market, also contributed to the group's weak underlying performance with Westpac’s home loan volumes falling by $14.7 billion (19.5 per cent), from $75.3 billion in FY18 to $60.6 billion in FY19.    

As a result, the bank reported a modest increase in its mortgage portfolio, which grew by approximately $4.5 billion, from $444.7 billion in FY18 to $449.2 billion.


Speaking to the media following the release of Westpac’s results, CEO Brian Hartzer partly attributed the bank’s subdued volumes to changes in the regulatory environment, which he said prompted the bank to adopt a conservative approach to home lending.

“Some of what's happened has been deliberate, in that in a period of low growth, [we] decided to prioritise margin and accepted that growth will be a bit lower,” Mr Hartzer said.

“That's a sensible thing to do from time to time.”

However, the chief executive conceded that some of the drop-off in volumes was “self-inflicted” and came in response to “clunky” credit processes adopted by the lender.

Mr Hartzer made specific reference to an expense categorisation tool introduced by Westpac in FY19, which he said was not received well by the broker channel.


“There was a tool put out to brokers in particular around how we needed to collect [expenses] data,” he said.

“The tool was frankly pretty clunky, so we've gone back and re-worked that. It’s a better experience now and we're seeing applications rise.”

Mr Hartzer added that the bank expects to return to system mortgage growth in approximately 12 months. When asked why it would take the bank a year to improve its volumes, the CEO pointed to a “lag” between applicant volume and settlements.

“We think we're on the right path but there'll be a lag before we can get back at growing at system,” he said.

Portfolio mix

Westpac continued to reduce its exposure to investment home loans over FY19, with the share of investment loans as a proportion of its overall portfolio falling from 39.1 per cent to 38.5 per cent.

The share of interest-only loans also dropped as a proportion of Westpac’s total mortgage book, falling from 34.8 per cent to 26.9 per cent.

The bank's reduced risk appetite was also reflected in a decline in the share of loans with mortgage insurance, from 16.3 per cent as at the close of FY18 to 15.6 per cent. 

However, over 30-day arrears rose from 1.4 per cent to 1.61 per cent, while over 90-day arrears increased from 0.72 per cent to 0.88 per cent. 

Fewer loans in Westpac’s mortgage portfolio were originated via the proprietary channel, down from 56.1 per cent to 55.7 per cent.

Westpac Group’s share of the Australian mortgage market remained stable at 23 per cent.

[Related: ANZ still grappling with ‘nuanced’ lending environment]

Plunge in volumes ‘deliberate’ and ‘self-inflicted’: Westpac
Brian Hartzer

If you have ever considered how you could better service your SME clients but lack the knowledge or confidence to do this beyond referring them on, this is a must-attend event for you. Don't miss SME Broker Bootcamp, a jam-packed, free-to-attend, practical workshop. Register today and secure your place at this interactive, flexible, must-attend event.

Charbel Kadib

Charbel Kadib is the news editor on the mortgages titles at Momentum Media.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

You can email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

The value of new home loans pivoted upwards after three months of freefall, according to the latest ABS data. ...

Heightened migration into Queensland has resulted in shrinking housing affordability, according to a state government department. ...

A real estate network's general manager has forecast South Australia house prices will grow by 15 per cent in 2022, as open borders raise de...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

Do you think APRA's bank buffer changes will see more borrowers use non-banks?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.