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Home loan delinquencies shaved at Westpac

The big four bank has revealed a drop in mortgage delinquencies, while hinting at a cash splash for shareholders.

Westpac posted its third quarter trading update on Tuesday, where it hinted the board was considering returning capital to shareholders, citing excess capital and franking credits.

The bank is expected to give an update with its full-year results, which could see it follow rival big four banks ANZ and CBA in launching a buyback

Meanwhile, mortgage delinquencies were on a decline. Mortgages that were past 90 days overdue slightly decreased during the quarter to 30 June, down by 1.1 per cent to in Australia, while in New Zealand, delinquencies were mostly flat, inclining by 0.3 per cent.

Amid ongoing lockdowns, up to 11 August, Westpac has approved $1.6 billion in home loan balance deferrals for around 3,700 customers, and $29.5 million in business loan deferrals for roughly 725 customers.

The bank had 199 properties in its possession as at June – in contrast to 180 in March and 256 in September.

Westpac called the latest deferrals spurred by the ongoing lockdowns “relatively small”.

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In 2020, the bank had provided $55 billion in mortgage deferrals to 149,000 customers, and $10 billion in business loan deferrals to 33,000 customers.

The bulk of customers had returned to payment, but around $1.9 billion in mortgages and $400 million in business loans migrated to hardship status.

During the June quarter, 106 mortgage customers were in hardship, down from 113 in March and 129 in September 2020.

In the consumer lending portfolio, (which totalled at $14.5 billion in June), the rate of delinquencies had slightly dipped, down to 3.2 per cent past 30 days overdue, from 3.5 per cent in March and 3.6 per cent in September 2020.

Similarly, there were 1.82 per cent of loan delinquencies surpassing the 90-day mark, compared with 1.92 per cent in March and 2 per cent in September.

[Related: Banks failing to uphold guarantor obligations: Report]

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